Called to public finance by a sense of civic responsibility, curiosity, or just plain happenstance, The Bond Buyer's Rising Stars of 2017 are prepared to grapple with the nation’s massive infrastructure needs, a technological revolution, and a volatile political and legislative landscape.
Portraits of the 28 men and women under 40 selected as this year’s Rising Stars are best painted not by the broad brush of their generation, but rather are drawn from their deeds, which have already begun to shape the industry. They are stewards of the public trust, dreamers, and innovators. They work in gilded towers, city halls, and everything in between from coast to coast. But whatever their backgrounds, be it analyst or banker, lawyer or insurer, they are ultimately defined most by their commitment to their work and their determination to meet tomorrow’s challenges with enthusiasm and optimism.
Tyler Old, a director in the Los Angeles office of PFM Financial Advisors LLC, had just moved to California from New York at the height of the financial crisis in 2008.
“I kind of stumbled into munis,” he said.
An equity research analyst in New York, Old said he spotted an opening in JPMorgan’s public finance division and took it, working there until moving to PFM last year. Although the start of his muni career may have been almost accidental, the nearly 10 years of success he’s had since are the result of his genuine passion for the work, he said.
“What has kept me doing this for the past 10 years and what has kept me passionate about munis is that it lets me combine my passion for finance and capital markets with a personal mission,” he said.
Old said he finds a lot of meaning in helping issuers finance their most critical infrastructure, such as water, and the 36-year-old said he often thinks about the challenges municipalities are facing in continuing to fund those crucial projects in the coming years.
“What’s going to be a hot topic over the next couple of years and decades is how do you identify new revenue sources and maximize existing revenue sources to fund all of this necessary infrastructure?” said Old. “How do you do all that while keeping someone’s water bill relatively affordable?”
For Wells Fargo Principal Investments director Claire Voorhees, 33, the path to municipal finance led to the other side of the globe.
“When I graduated from the University of Virginia, I joined York Capital Management, a New York-based hedge fund, and worked in operations,” she explained. “I was later transferred to Singapore to assist their trader, and each day, I would receive the analysts’ investment emails. I loved reading about the investments and wanted to have their job, but I knew I didn’t have the skill set.”
Voorhees decided to leave that job to pursue an MBA, and found a muni career opportunity just before she graduated.
“When I returned from spring break two months before graduation, I had voicemails from John Hallacy (then of Bank of America Merrill Lynch), to whom my resume had been forwarded. We had a phone interview, and despite the fact that I knew very little about the muni market, he piqued my interest,” Voorhees said. “I ended up loving munis, particularly the added element of public policy. Meredith Whitney released her report my first week working for John, which kept things interesting, and I was quickly assigned Puerto Rico. There are five times more issues in the Barclays muni index than the corporate index, and the vast number of credits and varied security structures in our market, combined with the limited disclosure, makes being a muni credit analyst that much more interesting.”
Voorhees said she sees a variety of pressing challenges in the market, including the widening infrastructure gap, growing pension liabilities, and a convergence of factors that could weaken investor demand for munis.
“Economic uncertainty and the lower probability of federal infrastructure spending initiatives materializing in 2018 have contributed to weak new issuance, causing investors to continue to reach for yield despite tight spreads,” she said. “Tax reform is still a threat, and the potential capping of the coupon exemption could lower individual investor demand for muni paper, while a significant cut to the corporate tax rate could reduce some bank and insurance company demand. If the Fed shrinks its balance sheet or if there is tax-reform, the risk to munis could be wider corporate spreads, weakening the relative value of munis.”
Sandy Pae Goldstein, 37, vice president at Fundamental Credit Opportunities, was working in urban planning when an investment banker at a conference talked to her about municipal finance. Now 10 years into her muni career, she says she’s seen the deterioration of Puerto Rico’s financial position raise serious questions, such as the relative strength of general obligation and revenue bonds.
“Munis just aren’t as ‘safe’ as they used to be,” Goldstein said.
She also said she thinks there remains room for some technological advances in the muni market, such as more algorithmic trading.”
“Data can also drive some investing decisions as well,” said Goldstein.
Another Rising Star excited about the technological possibilities for the muni market is Matt Posner, a 34 year-old managing director at Neighborly, a broker-dealer firm. After starting out in journalism, including a two-year stint covering the muni market for The Bond Buyer, Posner moved to Municipal Market Advisors (now Municipal Market Analytics) and worked there for nearly a decade before launching his own consulting firm, Court Street Group. After giving up ownership of Court Street, Posner joined Neighborly last year and said he is really excited about how the San Francisco-born firm is committed to utilizing the newest technology in the market. Neighborly was an early supporter of Blockchain, a distributed ledger technology that records digital transactions in a way that is accessible throughout a given network of computers, eliminating the need for a third-party or centralized data storage center.
Posner said the muni market remains old-fashioned relative to others, and that Neighborly hopes other market participants will also embrace a technological revolution.
“We want competitors because it’s validating what we’re doing,” Posner said.
A number of Rising Stars cited the personal desire to help people as a key part of their personal paths to muni finance.
Chicago Treasurer Kurt Summers, 38, ended up in the muni world “on purpose and by accident at the same time,” he said. Raised on the city’s south side, Summers noticed that his neighborhood didn’t seem to be getting the same government investments other neighborhoods were getting. He determined at a young age to put himself in a position to help influence those kinds of decisions that are very impactful on a local level.
“I’ve known for a long time that I wanted to be a part of that process,” Summers said.
“I always wanted to help people,” said John Medina, 37, a vice president and Senior Analyst at Moody’s Investors Service. Originally aiming to become a doctor, Medina said he discovered via a healthcare policy class that he could potentially widen the scope of his efforts.
“Oh, I can do this on a more macro scale,” he recalled thinking.
Medina now heads up the Moody’s public-private partnership sector, a model that was once pretty unusual outside of a few foreign countries but has begun to catch fire in the U.S.
“I like that it’s tangible real assets,” said Medina. He said policymakers have tools at their dispoal to address the infrastructure needs, and probably don’t need to be radically departing from those to make things work.
“When you keep trying to reinvent the wheel, you keep running into problems,” he said.
Diverse in experiences, the Rising Stars are nonetheless all working towards the same goal: a vibrant public finance industry that serves the public good and is prepared for the rising stars of tomorrow.