Sorry if this was already posted.....it's from Nov. 10.
Barclays a contender in US munis yr after Lehman
Tue Nov 10, 2009 10:26am ES
By Karen Pierog
CHICAGO, Nov 10 (Reuters) - Just over a year since Lehman Brothers' municipal bond operation morphed into Barclays Capital, the new name in the muni market has proven to be a contender.
Barclays won its first competitive deal and priced its first negotiated issue in the muni market on Oct. 28, 2008, following its takeover of Lehman's muni business at the end of September 2008.
This October, Barclays ranked fourth among muni senior managers for the month, with nearly $4.7 billion of debt in 22 issues that included a $3.4 billion California economic recovery bond refunding, according to Thomson Reuters data.
Barclays Capital, the investment banking unit of British bank Barclays Plc (BARC.L), has closely matched the performance of Lehman, which dissolved in a bankruptcy filing last year. In the first nine months of 2009, Barclays ranked sixth among senior managers, with $18.2 billion of bonds in 123 deals.
In the same period in 2008, Lehman also ranked sixth, with $22.9 billion of bonds in 188 deals, Thomson Reuters showed.
"We have the same bankers and the same infrastructure," said Jerry Rizzieri, Barclays' head of municipal finance, adding that by being part of a bank, Barclays has also been able to also offer liquidity facilities such as standby purchase agreements and letters of credit.
Many in the $2.7 trillion muni market had fretted that Lehman's demise would hurt liquidity, particularly after Bear, Stearns & Co was folded into JPMorgan Chase & Co (JPM.N) and UBS Securities dissolved most of its municipal operations last year. Both companies were big underwriters and traders of tax-exempt debt.
Frank Hoadley, Wisconsin's capital finance director, called Barclays a "potent force on the Street."
"Barclays has certainly stepped into (Lehman's) shoes as far as the muni market is concerned," he said.
DEMAND FROM OVERSEAS
Minnesota tapped Barclays to lead the state's first negotiated deal last month after a new state law temporarily lifted a requirement for competitive sales and allowed for negotiated general obligation issues through June 30, 2011.
Kathy Kardell, assistant commissioner in the state's management and budget department, said Barclays scored the highest among 17 firms seeking to be senior underwriter in terms of marketing plans and potential pricing levels. Barclays was also an active bidder for the state's competitive bond sales, she said.
Barclays has also made its mark as an underwriter of new kinds of muni debt authorized this year by the American Recovery and Reinvestment Act, including taxable Build America Bonds (BABs) that give issuers a 35 percent federal rebate on interest costs. Barclays ranked fifth among underwriters by the end of September, with nearly $2.6 billion of bonds in 16 deals.
Rizzieri, the Barclays executive, said taxable munis are expected to make up more than 20 percent of Barclay Capital's long-term credit index by the end of 2010. As a result, investors inside and outside of the United States that are benchmarked to the index will likely need to increase their allocation of taxable munis, including BABs, which Barclays estimates will have total issuance of almost $170 billion.
The index measures performance of the long-term sector of the bond market.
"You'll see more demand from outside the U.S. So far, it's not been a meaningful component of the distribution profile for Build America Bonds," Rizzieri said.
(Reporting by Karen Pierog; editing by Jeffrey Benkoe)
