Stifel's Heaney bows out after 43 years in municipal bonds

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Listening to Stephen Heaney enthusiastically discuss changes at Stifel Financial makes it hard to believe he would want to walk away.

Heaney, co-head of the public finance group, retires at the end of the week after 43 years in public finance.


He suggested more than once that the “big news” was really Betsy Kiehn’s ascension to head of capital markets at Stifel, not his retirement.

“We are a Top-10 underwriting firm and we have a young, aggressive woman running the capital markets side,” Heaney said. “Who else does? It’s a position that it is pretty high up in the organization and it’s pretty high up in terms of responsibility — and I think that needs to be recognized.”

Heaney’s decision to retire dovetails with changes in the firm's public finance division and the capital markets side, though they aren't connected. He could have continued in his dual roles as co-head of the municipal securities group and public finance with Peter Czajkowski.

“The position was in the process of being created, but my decision to step down sped it up,” Heaney said. “We had been working on creating a position like this a year ago.”

Kiehn takes on her new position Monday.

Kiehn, named a Bond Buyer Rising Star in 2018 headed a task force at Stifel created early last year to better integrate capital markets business lines after a decade of growth in Stifel’s public finance division through acquisitions.

“We are breaking out the capital markets side,” Kiehn said. “I will oversee institutional sales, trading and underwriting.”

The initiative that Kiehn said most excites her is “working to expand our core municipal sales and trading coverage to keep pace with the velocity of innovation in the market.”

That hits at the issue that Heaney said spurred the idea for the task force.

Traders had been telling Heaney and Czajkowski that investors don’t pick up the phone and call anymore: they review a firm’s bond inventory on electronic platforms. The idea for the new position probably developed from the simple fact that investors were buying bonds somewhere else and traders were getting upset, Heaney said.

“If we aren’t showing our inventories with CUSIPs and blocks, we won’t make a sale. This new position makes sure that happens.”

In addition to coordinating between the different arms of the capital markets group, Kiehn can reach out to divisions outside of public finance to make sure they have the resources to make sure Stifel is in the mix when investors are looking to buy.

Stifel has a “growing fixed-income capital markets platform that trades in high-yield,” Heaney said. “They are in the same position we are in, in terms of trying to provide the enhanced level of services that investors need.”

Stifel has been on a march over the past decade to add new capabilities through acquisitions and that is expected to continue, Heaney said.

The firm is also responding to alterations in what investors consider and changes in the way they operate, Kiehn said.

“We are seeing a change in the marketplace,” Kiehn said.

She laughs when asked whether when she was named a Rising Star last year it occurred to her that she would be rising up the ladder so quickly.

“The Stifel platform and this group in municipal securities are all so smart and talented,” Kiehn said. “Everyone is committed to the same success. I am so grateful I have been put in this position, it is a function of the team around us and certainly the talent in this group.”

Kiehn, like Heaney, ended up at Stifel in 2011 when the St. Louis firm acquired Stone & Youngberg, a San Francisco firm with a strong underwriting franchise in California.

The 128-year-old Stifel has made at least a dozen acquisitions since 2010, many of which have expanded different facets of its public finance practice. In 2015, Stifel acquired another strong California player, De La Rosa & Co.

“When Stifel purchased Stone & Youngberg, it more than doubled the group,” Heaney said. “It had a presence, but a smaller footprint. If you look at the size and the capabilities that Stifel has today in the market, it looks nothing like what it did 10 or 12 years ago.

“We are in the top 10 every year and have relationships with the largest institutional investors out there,” Heaney said.

Before the Stone & Youngberg deal, Stifel's public finance footprint was primarily in the Midwest.

Now Stifel has general obligation school bonds selling every day in different parts of the country, Heaney said.

The firm has more than 150 people working in public finance, said Heaney, but the number changes day-to-day between new hires and retirements.

When the acquisitions occurred, Stifel would put “the pieces together and march on,” Heaney said. “We needed to step back,” he said of the decision to form the task force.

“It was: Now, we have this great platform and we are underwriting more bonds than any other firm over the last 10 years, so how do we optimize these pieces?” he said. “Betsy is a great leader. When we formed the task force, we selected the person we thought could do the best job in terms of organizing and managing the task force.”


Heaney said he has really enjoyed building up the platform at Stifel.

“I believe there are tremendous years ahead,” Heaney said. “Some people on the inside and the outside don’t realize the capabilities we have built up here, but they will over time.”

“I am enthusiastic to have built something that will last, but I am tired,” he said. “After 43 years, I am ready to step aside.”

His retirement plans are to just sit around, he said, before adding that is really not like him. He will visit his kids in three parts of the country, travel, go cycling and figure out what’s next.

Heaney was head of public finance, chair of the operating committee and a member of the board of directors at Stone & Youngberg before Stifel acquired the firm. Under his leadership the firm expanded its investment banking practice beyond California and was a leader in K-12 education financing as well as development-related infrastructure financing nationally.

Though Heaney in his interview wanted to move the spotlight to Kiehn, many people who worked with him through the years wanted to recognize him.

“Steve has this gift of always maintaining the big picture — and knowing where the financing should end up, but still keeping track of the details along the way,” said John Murphy, a bond attorney at Stradling Yocca Carlson & Rauth. “He is among the smartest investment bankers I have worked with over the years. He is extraordinarily principled and really a great guy with whom to work.”

Heaney and Murphy worked on the deals that turned the 22,500-acre master-planned community called Summerlin on the edge of Las Vegas owned by Howard Hughes into a reality.

It was not just his intelligence that peers and colleagues commented on, but also his wit.

The meetings come early when you work in California and serve on the East Coast-based Municipal Securities Rulemaking Board as Heaney did from 2009 to 2013, ascending to vice chair in his final year on the board.

Lynette Kelly, the MSRB’s president and CEO, laughed remembering what Heaney said about one meeting scheduled for 7 a.m. Eastern time.

“Could you make the meeting any earlier?” he joked about the time, which would have put him on the call at 4 a.m.

“He has that kind of humor that is really sophisticated,” Kelly said. “He always treats people with respect. He is just a legend in this market.”

Kelly said Heaney's MSRB service helped at a critical time, as it worked out guidance after Dodd-Frank.

“We were developing a regulatory regime for municipal advisors,” Kelly said. “He embraced EMMA as a tool for transparency in the market. He was a very big champion of EMMA.”

Terry Maas, managing director of Hilltop Securities, who before competing with Heaney worked for him at Stone & Youngberg, says Heaney is a Boy Scout in the best sense of the word.

Heaney likes bright margins in the muni industry that promote transparency, eliminate conflicts of interest and encourage integrity in muni transactions.

“I think our industry gets a bad rap,” Heaney said of why he has volunteered so much time on boards that have established best practices.

He is also the past chair of the California Public Securities Association and a past trustee for the California City Management Foundation.

He said the municipal bond industry has the reputation with the SEC as being the Wild West. Establishing a regulatory framework that demonstrates it’s not could change that image, he said.

Heaney, who started in the industry as a credit analyst at Moody’s Investor Service, is “extremely talented credit-wise,” said Maas.

“He understands all aspects of a bond deal and knows how to execute it to perfection,” Maas said. “He is very good at helping issuers strengthen their credit.”

Sean McCarthy, managing director and chief executive officer at bond insurer Build America Mutual, worked with Heaney early in his career at E.F. Hutton.

“He was a senior, brilliant investment banker and I was a junior numbers runner in New York,” McCarthy said. “Steve was always creative in terms of being able to visualize what a great execution would be for the issuer; and most importantly for me he was patient with young people.”

Heaney helped usher in brand new financial vehicles like floating-rate bonds, zero-coupon bonds and a lot of creative revenue bond structures.

“He is exactly the kind of person you want to work with, he is intellectually talented, honest and has a great sense of humor,” McCarthy said.

A testimony to a great career in public finance is when your colleagues and the issuers will miss you equally, McCarthy said.

“He will be missed."

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