Blaylock & Partners, an institutional brokerage and investment banking firm based in New York with offices in Chicago and San Francisco, is gearing up to offer fixed-income investors options and swaps based on taxable and tax-free municipals. Stephen Lang, managing director, municipals and derivatives in San Francisco, said Blaylock is targeting to write $500 million in municipal derivative business in 2004 and about $2 billion in 2005.
Blaylock already focuses on selling and underwriting taxable munis, Lang underlined. The boutique wants to focus on options and swaps, Lang emphasized. The focus will be on writing muni swaps referenced to the BMA Index and LIBOR. Blaylock plans to hire about 10-15 professionals for muni sales and trading in San Francisco and Chicago by the end of summer, Lang said.
James Tammaro, senior managing director, fixed-income sales and trading in New York, added the firm decided to enter the municipal business in anticipation of increased borrowings by the municipalities to meet ever-growing deficits and to capitalize on low rates. Tammaro stressed that Blaylock, being a minority-owned firm, is primed to capture business because most municipalities are required to allocate the underwriting of between 5%-10% of the munis they sell issue to minority-owned firms.
The firm has recently hired a senior banker, Stephanie Neely, from LaSalle Capital Markets, to head Blaylock's Chicago office. And Ken Hedrick joined from J.P. Morgan Securities earlier this year to cover accounts on the West Coast and in Texas. Lang himself joined from Merrill Lynch in March to set up the muni derivatives.