Standard & Poor's Corp. this week continued its push toward a more regional approach to the ratings process, naming the executive director of Michigan's Municipal Bond Authority to head up a new branch office planned for Chicago.
Sarah Ward Eubanks, who has run the Michigan authority since 1989, will take over as director of the Standard & Poor's Midwest office when it opens in July, company officials said this week.
The announcement comes as the rating agency wraps up plans for another outpost in Boston, set to open formally next month.
Philip N. Shapiro, formerly the chief financial officer at the Massachusetts Water Resources Authority, has been running the Standard & Poor's Boston operations out of a temporary headquarters for the past seven months.
The New York City-based agency's only other regional office, in San Francisco, opened in 1989 and now has 16 analysts working on municipal ratings.
"The whole point is that as the types of issues that we're asked to evaluate become more complex and as the need for a quick response becomes even greater, having analytical expertise on hand where the issuers and investors can access it quickly, personally, and in the same time zone" has become increasingly important, said Leo C. O'Neill, president of Standard & Poor's.
Vickie Tillman, executive managing director of the rating agency's municipal finance department, said the regional strategy is aimed in particular at investors in the regions targeted and at attracting small and mid-size issuers, a sector where the agency sees "market share opportunities."
Tillman said several local issuers in the New England region have signed up for a Standard & Poor's rating since the Boston operation got underway last year.
"Phil's familiarity with a lot of the local issuers and finance officers has given him some accessibility that we may not have had had we not hired somebody from the area," Tillmnae said. "By being on site, he can see what their needs are."
The agency is hoping Eubanks can produce the same effect with issuers in the Midwest.
The San Francisco operation drew some complaints from local California issuers when it first opened, because the agency still required most local officials to travel to New York City for meetings. But as the bureau has grown over the past several years, about 40% of the rating decisions are now made on site in San Francisco, Tillman said.
She said the agency's goal is to have about 60% of the region's ratings assigned in San Francisco, but to maintain "a blend between the regional and national perspective."
Tillman said Chicago's office is expected to grow to the point where issuers in the region could trim their travel to New York, but Boston's proximity to New York will probably mean that office will remain' somewhat smaller.
"I can get to Boston quicker than I can get to work," Tillman quipped.
Main competitors of Standard & Poor's in the municipal arena, Moody's Investors Service and Fitch Investors Service, are also branching out from their New York headquarters.
Moody's has two regional offices -- one in San Francisco that opened in 1989, and one in Dallas that opened last year. Fitch opened offices in Chicago and Dallas last year and one in San Francisco earlier this month.
Competition for ratings business has heated up in recent years as some issuers have foregone a rating from one or another agency in order to express their displeasure with downgrades or analysts' criticism.
That approach is short-sighted, O'Neill said, because ultimately the market ultimately makes its own determination about whether a particular credit rating is appropriate.
"We're going to call them as we see them, and from time to time issuers may not find that particularly endearing" O'Neill said. "If our ratings differ from others' and issuers decide on that basis to select another agency, that's their call and it's nothing I feel uncomfortable about."
In addition to Eubanks, Standard & Poor's also said the Chicago staff will include John Kenward, currently a director in the agency's municipal structured finance operation, and Joseph O'Keefe, director of the general obligation group and a specialist in Midwest credits.
Eubanks has been with the Michigan Municipal Bond Authority in Lansing since 1987, when she was deputy director. She became acting director in 1989 and director in 1990.
The state agency issues bonds for local governments and school districts in Michigan. A spokeswoman for Michigan Treasurer Doug Roberts said the selection of Eubanks' successor will be subject to the state's civil service process and the authority board will make the final selection.
Karen Pierog contributed to this article.
