CHICAGO - Two veteran Ohio municipal bond traders who started in the business back when traders wrote tickets and up to 75 firms worked a single deal retired Friday from Stifel, Nicolaus & Co.
Bob Perrier and Linda Erlandson together have nearly 100 years of muni bond experience, and have seen the quiet cottage industry transformed by the influences of technology, the dominance of the institutional buyer, and a not always-flattering national spotlight.
They've also spent nearly their entire careers working together. Friday, Jan. 30 was the last day for both.
Coinciding with their retirements, Stifel is closing its Ohio muni bond trading desk and moving the operation to its St. Louis headquarters.
Perrier began his career as a muni bond salesman in 1964, at Field Richards and Co., which was soon bought by McDonald and Company. Erlandson began her career in 1969 at McDonald.
They worked there for more than 20 years before moving to Butler Wick & Co. in 1991, where they launched the first capital markets group. They ended up at Stifel when Stifel bought Butler in 2009.
They've spent their careers in Ohio and mostly focused on local Buckeye paper. They've seen the business undergo major changes, including the rise of the institutional buyer, which has often come at the expense of the retail customer.
Perrier recalled that when he started, there might be as many as 75 underwriters on one deal, and there were as many as 25 muni bond firms in Ohio alone. "It was a very much a small cottage industry," he said.
The number has dropped as institutional buyers have come to dominate the market.
"The institutions buy bonds cheaper and you just can't cover the retail customer as well," said Perrier. "The reality is it's an institutional market anymore, and the retail ends up buying bonds at marked-up prices."
That's made once-lucrative spreads tight enough that it's not as valuable to work the retail market, they said.
"All that day-to-day information on TV, it's almost too much and it's paralyzing to most retail accounts," said Erlandson, who started her career as a billing clerk at McDonald, and was soon promoted to the trading desk, where she was the first woman trader in Ohio.
Improved information and technology, however, have helped issuers and ratings analysts become savvier, Perrier said.
"The issuers, they're getting to be more professional and they've gone a long way," he said. "I can remember when being the clerk of a small Ohio town was a part-time job and you couldn't find them if you'd gone looking for them."
And analysts at the big three ratings agencies are "doing a better job all of the time" because of the information they get, he said.
The national spotlight on troubled credits has come about in part because municipalities started to take on more debt than they used to, coupled with the 2009 housing collapse, Erlandson said.
"We did not have the Detroit problems; leveraging brought a lot of that on," she said. "It used to be more straightforward and you never used to see municipalities do that. We need to watch that now and maybe when these markets change a little bit we'll see this get better." But the majority of issuers are sound, they say, and that's something that hasn't changed over the years.
Something else that hasn't changed much is the lack of women in the industry, Erlandson said. In addition to being the first woman Ohio trader, she was the first woman who was made a partner at McDonald.
But the muni market hasn't made the kind of strides with women that other sectors have, she said. "You do see more women in the bond business in manager-type positions, but the process has been very slow," she said. "You have the good old boys club that's still pretty strong, and it's hard to break through that. But I do believe that they're seeing the light - slowly."
Erlandson, 66, said she looks back on her career with fond memories. "This business has been very, very good to me."
Perrier, 76, noted that his career has been long enough to outlast a former muni market powerhouse. "When I started in the business, Merrill Lynch was not in the muni bond business, and nowadays you have to look for them pretty hard, so I guess I survived them," he joked. "And starting next week, you won't be able to find me anywhere either."