Thursday, October 28, 2010

Dr. Krause Visits BMO Capital Markets in Chicago

On Wednesday, October 27, Dr. David Krause (AIM program director) visited BMO Capital Markets while in Chicago for the Marquette Circles event. He met with Dave Kucera (MU '84), Managing Director / Head of US Securitization Group. They had a productive and wide-ranging discussion about the AIM program, BMO, macro-economic conditions, and the status of the securitization markets.

Dave Kucera
BMO Capital Markets is a North American financial services provider that offers corporate, institutional and government clients access to a complete range of products and services. These include equity and debt underwriting, corporate lending and project financing, merger and acquisitions advisory services, merchant banking, securitization, treasury management, market risk management, debt and equity research and institutional sales and trading.

BMO's Securitization Group creates liquidity for previously illiquid assets (auto loans, student loans, etc.) at a lower cost than most traditional financing instruments. Virtually any monetary asset with a contractual payment flow can be securitized. This allows capital to be raised by companies with contractually committed future cash flows, such as royalties or other non-executory contracts. BMO can, in turn, provide investors with almost any level of risk, from AAA to non-investment grade. Dave Kucera and his Chicago-based team publish a monthly securitization newsletter.

Dr. Krause said, "It was a pleasure to sit down with Dave and talk about securitizations in the post-financial crisis era. As his most recent newsletter shows, ABS issuance is still occurring and currently is being led by auto loans. Given some of the actions of the federal government to support the securitization market, the yield spreads of AAA, 3-year ABS loans is at levels below that observed in the pre-Lehman period. It looks as if improving credit quality and a limited supply of ABS is steering investors toward lower tranched assets in order to obtain higher yields."

He continued, "It was an excellent meeting and I look forward to bringing Marquette finance students to BMO for a visit with Dave and his team. We also are interested in viewing their trading floor the next time we visit Chicago."