Seeking to expand its bond business, brokerage Charles Schwab Corp says it will give clients access to new issue municipal debt through Piper Jaffray Companies.
The tie-up with the investment bank will substantially increase muni bonds available to retail investors and advisers using the brokerage's BondSource Web-based platform, Chad Jones, a vice president at Schwab in Denver, said on Tuesday.
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"We thought it was an important step in broadening our overall access to municipal bonds," Jones said.
Minneapolis-headquartered Piper Jaffray last year served as underwriter or financial adviser on 900 muni bond transactions with a total par value of $52 billion, according to Schwab.
Piper Jaffray was not available to comment on the agreement with San Francisco-based Schwab.
Jones said Piper Jaffray's presence in the Midwest will expand muni debt opportunities for Schwab clients in that region and they will also have increased access to smaller new muni issues through the investment bank.
BondSource allows Schwab clients to buy new issue bonds as well as debt on the secondary market and has traditionally been strong in terms of California, New York, Texas and Florida muni debt, Jones said.
Schwab clients over the twelve months ended in August had access through BondSource to more than 930 new issue bond offerings, including nearly 600 new issue muni deals.
While Schwab is best known as a discount stock brokerage, it anticipates a growing market for muni debt propelled by high-net worth individuals, retirees and investors approaching retirement, Jones said.
Retail-level interest in muni debt, which many investors see as a conservative investment with the added benefit of tax-free payments, has been strong this year, underscored by net inflows into municipal bond funds.
The funds, popular with retail investors, have posted net outflows this year during only two periods - the weeks ended April 11 and October 31 - according to Lipper, a unit of Thomson Reuters.
(Reporting By Jim Christie; Editing by Bernard Orr)