Municipal credit analyst Philip Villaluz was recently named head of municipal research and strategy at Sterne Agee & Leach Inc. in New York.

Sterne Agee, a Birmingham, Ala.-headquartered investment firm founded in 1901, has been involved in public finance for decades but has been making a bigger push into the market in recent years.

The firm's staff of 1,200 includes 75 fixed-income professionals spread across 18 offices, with 48 retail outlets across the country. Its public finance division offers underwriting, institutional sales and trading, and a retail and middle-market sales force.

Villaluz brings 18 years of experience to the new role, which he took on roughly two months ago.

"I began and maintain a weekly fixed-income strategy commentary that focuses on municipals, taking more of a macro-level approach," he said Tuesday. "I'm also involved in discussing specific credits and sectors away from my published research."

Credit analysts have been in heavy demand in recent years since the municipal bond insurance industry, which once wrapped more than 50% of new issuance with triple-A ratings, imploded in 2008. Municipal market participants could no longer rely on credit enhancements and had to perform more of their own credit work and surveillance to understand their portfolios.

For Cary Cooper, head of fixed income at Sterne Agee, the changing dynamic was an opportunity to increase the firm's footprint in public finance.

"For every product we have, the business model is based around research and strategy," Cooper said. "Our accounts are going to have to do more homework on credit of the underlying entity as opposed to just taking Moody's and S&P's word for it."

Villaluz began his career in 1993 at Prudential Asset Management, where after seven years he left as a senior municipal research analyst. In 2000, he moved to Salomon Smith Barney, where he was a senior credit risk officer covering munis for five years.

Villaluz then became a senior sell-side analyst at Merrill Lynch, covering municipal transportation and infrastructure credits. During his four-year tenure, he received the Smith's Research All-Star Analysts Award for transportation revenue bonds four times.

Most recently, he spent 13 months directing institutional sales at Advisors Asset Management.

Sterne Agee's research-based approach benefits clients after executing a trade by keeping them up to date, Cooper said, rather than just focusing on new-issue origination.

"We do pre-purchase relative value and post-purchase surveillance," he added. "You must have the tools to decide what's cheap and what isn't, and you also must have a team of people digging into the credit."

Sterne's separately managed public finance group, led by Hanson Slaughter, has led 44 issues totaling $634 million so far this year, and co-managed an additional 302 issues worth $2.1 billion, according to Thomson Reuters. Those figures represent volume increases of 189% and 223%, respectively, versus four years ago.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.