The New York offices of BlackRock, the giant fund manager, crackle with the energy of money. BlackRock is the largest fund complex in muniland, with over $100 billion in municipal fund assets along with undisclosed amounts of separately-managed accounts that hold municipal bonds.
Peter Hayes leads the BlackRock Municipal Bonds Group. He is also a member of the Americas Fixed Income Executive Team and BlackRock’s Global Operating Committee. Hayes is muniland’s biggest kahuna. When he and his team talk, people listen.
Hayes said that muniland was oversold at the end of 2013. Now he is seeing a bigger crossover presence chasing yield. Crossover refers to non-traditional buyers who don’t use the municipal tax exemption.
Tax hikes on high income earners have helped produce steady muni fund inflows since January 15, according to Hayes. BlackRock has also had good growth in separately managed accounts (SMA). Muniland issuance is down 25 percent in 2014. Relative value is lower than the pre-crisis level, and Hayes says we may be in this environment for the duration of 2014. It is the strongest technical environment in some time, says Hayes.