Phil Fischer, 30-year public finance veteran and previous head of municipals research at Bank of America Merrill Lynch, is returning to the firm to lead municipals and indices research, sources at B of A confirmed.

He was head of the municipals research group from 2004 until 2009, when he retired. After he left BofA, Fischer started a consulting firm with municipal bond attorney John Sprung, where he has been working as a managing partner.

John Hallacy, a 35-year industry veteran, took over as head of the group in January 2010 after Fischer’s departure. He confirmed Monday that he is retiring from the position at the end of July. Hallacy, 57, spent 23 years with the firm.

“To be perfectly honest, I don’t know what the hell BofA Merrill is thinking,” said Dick Larkin, senior vice president and director of credit analysis at HJ Sims & Co., who spoke to Hallacy Thursday. “It’s like the Yankees giving Derek Jeter his unconditional release.”

Larkin has known Hallacy since 1978 when he took an entry level job at Standard & Poor’s. Hallacy worked for Larkin for three years, before leaving Standard & Poor’s in 1984 and moving to Federal Guaranty Insurance Company for a year. After FGIC, Hallacy worked at Bond Investors Guaranty, which was later acquired by MBIA Inc.

“Phil Fischer is a top notch, quality analyst,” Larkin said. “B of A Merrill Lynch is just raising more questions about internal politics than should be the case for such a large and well-respected organization. What prompted all of this?”

Along with Hallacy, the departures of two other strategists in the group — Susannah Page and Howard Sitzer — were also announced earlier this week. A person familiar with the matter said the firm is going in a different direction, changing emphasis from a focus on credit to a strategy focus.

A spokesperson for B of A said the company declined to comment.

Starting June 10, Fischer will lead the group, which is to be called “municipals and indices research,” instead of “municipals research.”

He will report to Michael Maras, head of global credit and global emerging markets fixed income research at B of A.

“Under Phil’s leadership, the group will continue to produce municipal credit research and develop a municipal strategy product with a focus on thematic pieces and relative value analysis and ideas,” according to an internal memo written by Maras.

The group will work closely with other fixed income and global wealth and investment management research professionals to analyze and position the municipal asset class as part of an asset allocation strategy and determine relative value compared to other fixed income products, the memo said.

After Fischer left B of A in 2009, saying he wanted to “take it down a little bit,” he spent his time on consulting, writing a book, and traveling.

He and Sprung started eBooleant Consulting, LLC, a systems consulting firm that delivers algorithmic trading and portfolio management services to broker dealers and investment managers.

Earlier this year, Fischer published his book, Investing in Municipal Bonds: How to Balance Risk and Reward for Success in Today’s Bond Market.

Before he became head of municipal bond research, Fischer had been with Merrill Lynch since 1987, before it merged with Bank of America in 2008. He started as vice president and senior strategist in Los Angeles and San Francisco, and later went to New York to focus on municipal bonds for Merrill’s institutional, and later retail, clients. There, he eventually became head of the global index system, in addition to head of municipal bond research.

Prior to Merrill Lynch, Fischer also worked as a senior research analyst at Salomon Brothers Inc., and a vice president at Citicorp Investment Bank.

He has been recognized by both Smith’s Research and Institutional Investor as an all-star municipal strategist for more than ten years.

Fischer did not immediately return a message seeking comment.

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