Changing Of The Guard

Dynamic, new money managers are setting up shop and expanding their offerings

business grow like gangbusters. On the contrary, Reynolds asserts that he has to be better than his competitors to win new business and establish credibility. “We’re the new kid on the block, so we’ve got something to prove,” he says.

In one deal in which Loop acted as sole financial adviser, the Illinois Sports Facilities Authority entered into a $105 million forward interest-rate swap in connection with refinancing for the Chicago White Sox’s new Comiskey Park. The deal amounted to a net savings of $11.8 million. Separately, Loop has co-managed the underwriting of $2 billion in municipal bonds, and has been a selling group member for another $4 billion worth of muni bonds.

That Loop Capital is doing well in the muni business defies conventional wisdom. Some observers, citing the sharp decline in municipal issuances from 1994 through 1996, believe the muni industry is going the way of the dinosaur. But other experts and recent data suggest the muni bond business is in no way down for the count.

In February, for instance, municipalities issued $22 billion in bonds to finance everything from building local schools to street improvement projects. The February figure marked the best single month ever for municipal issuances, according to Securities Data Co., a financial information services firm in Newark, New Jersey. Consider also that last year, municipal underwriting totaled $215.1 billion. While that amount is down some 25% from the height of the muni business, 1997 still ranks as the third best year on record for municipal issuances.
Last year was surpassed only by 1993, which saw $289.6 billion in deals, and 1992 when it hit $231.5 billion. The volume of offerings in which minority firms were lead-or co-managing underwriters reached $65.6 billion in 1997, compared with $61.9 billion in 1996. The recent uptick in issuances strengthens the resolve of those involved in underwriting municipal debt.

“I’m still a big believer in munis. It’s a very viable, profitable business if you can be competitive,” insists Napoleon Brandford III, chairman of Siebert, Brandford, Shank & Co. L.L.C. (No. 6 on the BE INVESTMENT BANKS list) Brandford said 90% of his business is munis; the rest is federal agencies. In September 1996, amid an investigation into the business practices of Grigsby Brandford & Co. founder Calvin Grigsby, Brandford and Suzanne Shank left the firm to form SBS. Brandford and Shank own 51% of SBS; the remaining 49% is owned by Muriel Siebett & Co. Inc.

Pointing to the collapse of Grigsby Brandford and other black-owned firms, some industry watchers say many African American investment bankers have fallen victim to run-ins with regulators, net capital problems, tougher industry conditions, and–in some instances–racism directed at successful black concerns.

In any case, Brandford doesn’t have time for a pity party. “I don’t view myself as a victim,” he says, adding that it’s a misconception in the media that African American-run firms are the primary companies that have gone out of business. “Ten years ago, some

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