On Wednesday, February 10, 2016, Mike McKay, Managing
Director and Head of Credit Research for Kramer Van Kirk Credit Strategies,
presented in Dr. Krause’s AIM class. Kramer Van Kirk Credit Strategies (KVK) is
a Chicago based, credit asset management firm. It was established in 2012 and
managed by Principals Tom Kramer (Marquette alumnus) and Tim Van Kirk.
KVK has more than 20 credit, operations and compliance
professionals with extensive experience in the credit markets. KVK’s strategy focuses on Collateralized Loan
Obligation (CLO). Since the firm’s
inception, Kramer and Van Kirk have structured eight deals in excess of $4B in
assets under management. KVK has extensive knowledge of bank loans and
structured vehicles with a history of raising and managing eighteen CLOs.
Mr. McKay has the overall responsibility for the structure
and development of the credit research group comprised of nine research
analysts. Mr. McKay has over 20 years of company specific credit analysis and
industry risk assessment and reports directly to the Chief Risk Officer. Prior
to joining KVK, Mr. McKay was a Credit Director at GE Capital Commercial
Finance where he was responsible for a team underwriting and managing a loan
portfolio in excess of $1B.
He shared interesting material with the AIM students about
the CLO market over the past decade. His presentation included a discussion
about the process KVK employs in structuring collateralized loan obligations.
The students learned about the CLO cashflow life cycle, tranches, and the
sourcing of assets. He shared an interesting data item with the students –
between 1994 and 2015, S&P rated over 6,000 CLO tranches and only 25 were
downgraded to a rating of D – a mere 0.41% of all CLOS – and of these most were
not structured as traditional CLOs. These weren’t the securitized products that
were the gist of The Big Short!