Morningstar to Offer Muni Bond Research Soon

Morningstar, Inc. will soon enter the municipal bond research business.

The financial markets research, analysis, data and ratings firm estimates that it should be ready to offer credit quality and price discovery products and services on the municipal market for registered reps, asset managers, banks and insurance firms likely over the next three months.

Morningstar said adding muni research will provide the missing element of its fixed income coverage, said Jeff Westergaard, head of municipal analytics at Morningstar.

“After launching, we’ll have research coverage across what we see as the primary fixed income asset-class components,” he said. “And it will add value to our existing clients and new clients, in terms of having a fairly comprehensive scope of analysis products from the firm overall.”

Morningstar will focus initially on credit quality and price discovery. The municipal group wants to help market participants determine the worth of municipal securities, Westergaard added. The firm also plans to use analysis, commentary and data to shed light on a bond’s credit quality.

“We also want to offer tools that will help in the price discovery process, trying to give context around information in the market, and apply it to any particular, individual security,” Westergaard said. “Longer-term, we want to be able to offer products that look at baskets of securities, portfolios, etc., and to try to analyze the collective characteristics or risks of those securities in aggregate, in addition to and on an individual obligor issue or security level.”

Morningstar brought in Westergaard, a 30-year veteran of the fixed income markets, a little more than a year ago to build the municipal group. He has spent most of his career on and around municipal bond trading desks.

Most recently, he worked at First Trust Portfolios, an asset manager located outside of Chicago. Prior to that, Westergaard worked at UBS; Paine Webber & Co., which UBS acquired; and Kidder, Peabody & Co., which Paine Webber acquired, over the course of 10 years. For the past 15 years, he added, his background consisted primarily of trading, some buy-side analysis, as well as working with investors and sales organizations.

There are nine people in the municipal group, Westergaard said. Each is involved in analysis in some capacity.

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