JPMorgan Chase & Co., consistently one of the top municipal bond underwriters, has been responding to increased appetite in the market recently by expanding its retail networks, marketing taxable municipal bonds for international distribution and bulking up its public finance staff.
The firm has ranked third among muni underwriters in the country over the past five years. From January through May, JPMorgan Chase senior-managed 158 issues worth $20.8 billion, ranking it third with a 12.3% market share, compared with an 11.4% share for all of last year, according to Thomson Reuters.
Known historically for its institutional distribution, the firm began beefing up its municipal retail network through an agreement with UBS Wealth Management in August 2008.
In January, the two-year agreement that gave UBS access to new-issue supply and JPMorgan Chase access to UBS' nationwide retail sales force was extended to 2013.
And in April, JPMorgan Chase also teamed up with Charles Schwab, whose clients now have access to JPMorgan Chase's new-issue and secondary munis, plus other fixed-income products.
"We pursued retail distribution partners whose platforms were complementary to ours," said Paul Palmeri, head of public finance sales and trading at JPMorgan Chase.
"Leveraging Charles Schwab's and UBS' retail distribution capabilities through JPMorgan gives issuers access to an enormous retail network that very few can rival."
With the agreements, the firm can reach nearly 18,000 advisers, including 8,200 brokers through UBS and 6,000 registered investment advisers through Charles Schwab.
By numbers, that puts JPMorgan Chase "on the same plane" as Bank of America Merrill Lynch, according to Palmeri.
"The more buyers we can bring into the muni market, the better it is for everyone involved," said Jeff Bosland, JPMorgan Chase's head of public finance.
Increased retail demand should allow the firm to issue bonds at a lower yield, and give it more leverage when pricing for institutions, which typically occurs after a retail order period.
Demand from international buyers has also been growing for Build America Bonds, the taxable muni debt created last year in which the federal government covers 35% of the interest costs.
Palmeri said more foreign clients are viewing BABs as a "higher-grade corporate," as the credit quality of municipal debt is often considered stronger than corporate debt.
And the yields can be higher, too.
"Appetite can be substantial," said James Lansing, head of syndicate and debt capital markets at JPMorgan Chase.
"Foreign investors are hungry for quality and yield, but many are still in the education stage."
JPMorgan Chase, among other firms, has been trying to feed that hunger by taking BABs on the road internationally. It has introduced investors to the new asset in Canada, Europe, Australia, and Asia.
Responding to growth domestically and internationally for taxable and tax-exempt assets, JPMorgan Chase has added 20 people to its public investment team in the past year, including nine executive directors from top competitors in the field.