RBC sees some turnover as well as growth in municipals

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RBC Capital Markets had a recent shake-up with the departure of James Tricolli as co-head of municipals.

Bob Spangler is now head of municipals at RBC and has plans to continue to grow its business in the muni space.

Robert Spangler

Tricolli did not respond to a request for comment on why he is no longer employed at the firm or where he is headed.

Spangler said he and the firm could not comment on the reason for Tricolli’s departure.

However, Spangler spoke at length about the plans he has for RBC’s business in munis during the COVID-19 crisis and beyond.

“When you look at how our muni finance platform has fared in 2020, we’ve maintained our market share, No. 4 negotiated ranking with underwriting volume up 20% consistent with the overall market,” Spangler said.

“We are focused on negotiated deals with our broad base of clients — with over 600 negotiated deals this year,” Spangler said. “We do not do as much in the competitive space.”

RBC Capital Markets remained in the same place it was after one quarter but edged up a spot year-over-year. The firm has underwritten $13.75 billion year to date as of the most recent data available, good for a 7.3% market share. Spangler noted that since this report came out, the firm now has 8% of the negotiated market.

“Our banking staff is more than 180 people with a wide variety of both regional-oriented clients and larger issuers on a syndicate level.”

Seven of the top 10 bookrunners wrote more business in the second quarter than they did in the first three months of the year. There are also three firms that moved up into the top 10 this year that did not make it in the same time period of last year.

“We want to continue to grow ... there are still some spots where we want to grow. We have to grow,” Spangler said. “We are the largest underwriter on state housing efforts, as an example, and we have hired three managing directors in healthcare this year. Transportation issuers are also on our radar.

“However, we’re not overweighted in one area in particular,” he said.

In terms of how the firm has been faring in a work-from-home environment, Spangler said RBC did a quick job on an enterprise level in getting the firm up and running in less than a week.

“We were very quick to expect to work from home. All of our laptops have VPN access so security is tight,” Spangler said. “Bankers are functioning just fine. We do regular phone calls and webex-type communications with clients. Really, it’s amazing how well the market has functioned since early April from a sales, trading and underwriting perspective while working from home.”

And when asked about headcount, Spangler said RBC has not hired any new senior bankers recently, but has hired new analysts and brought on other new employees, all working remotely.

Spangler said RBC is working in the taxable market as well and that issuers are smart to access it, given the lack of tax-exempt advance refundings and the market's ultralow interest rates.

U.S. governments are well placed to get through this with some time, he said.

Spangler noted that Moody’s Investors Service said there may be no downgrades of state and local governments.

“There’s a lot of strength in the credit of U.S. governments,” he said. “And there is a faith in ability of states and localities to weather the pandemic.”

When asked about “green” or “impact” bonds, Spangler said there is a definite interest in munis around the world.

While there is no universal language for impact or green, “uniformity around green bonds over time will emerge,” he said. “It’s such a diverse business model and we are getting our share of that market and we will continue to pursue it.”

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