Duke Street Raises Debt For Duchess

  • 20 Apr 2003
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Duke Street Capital Debt Management, a London, U.K.-based asset management group, has raised the debt for a EUR 550 million collateralized debt obligation called Duchess II CDO, the firm's second CDO. The deal predominantly comprises European leveraged loans with a small bucket for Euro-denominated U.S. loans, explained David Wilmot, a director of Duke Streets' debt management business.

Explaining the timing behind the note issuance, which was jointly led by CIBC World Markets and Société Générale, he noted. "The deal was significantly ramped up after a gestation period of several months spanning strong levels of quality new asset issuance." The notes were issued to refinance a warehouse facility and underpin the fund with long-term capital, he added. A R287.15 million triple-A tranche priced at EURIBOR plus 65 basis points. In addition to a E52 million equity piece, the deal also includes a E75 million revolver. The vehicle is reportedly 79% ramped up.

Duke Street raised the debt for its first structured vehicle--the EUR 1 billion Duchess I--last year after the debt management business was formed in November 2000. "The business was set up to be a major player in the European loan market," Wilmot said. The 15-strong team includes several former leveraged finance bankers, including Ian Hazelton, the chief executive of the debt management business. Wilmot, meanwhile, was the head of SG's U.K. leveraged finance team.

The leveraged loan market is a disciplined, mature industry, Wilmot stated. There is a low default rate while the asset class offers stable returns and low volatility, he said. "It is perfect for large structured vehicles." The pace of European CLO issuance is picking up, but Standard & Poor's has raised concerns over the amount and diversity of collateral in the market (LMW, 11/17). Commenting on the issue of diversity, Wilmot responded, "It has not been the case for us. We have not experienced difficulty in meeting diversity objectives. There is plenty of market issuance, creating diversity both in geography and sector."


How It Was Priced
RatingTranche SizeSpread
Aaa/AAAEUR 6.64.8%
Aaa/AAAEUR 287.15EUR+65
Aa3/AA-EUR 49.5EUR+100
A2/AEUR 44EUR+200
Baa2/BBBEUR 7.37.32%
Baa2/BBBEUR 11.95EUR+300
Ba3/BB-EUR 6.7511.52%
Ba3/BB-EUR 9.75EUR+750
  • 20 Apr 2003

GlobalCapital European securitization league table

Rank Lead Manager/Arranger Total Volume $m No. of Deals Share % by Volume
1 Bank of America Merrill Lynch (BAML) 7,026 25 11.95
2 Citi 6,449 21 10.96
3 BNP Paribas 5,093 18 8.66
4 Barclays 4,040 11 6.87
5 Lloyds Bank 3,615 14 6.15

Bookrunners of Global Structured Finance

Rank Lead Manager Amount $m No of issues Share %
  • Last updated
  • Today
1 Citi 1,505.59 4 23.31%
2 SG Corporate & Investment Banking 1,292.64 1 20.01%
2 Rabobank 1,292.64 1 20.01%
4 BNP Paribas 598.25 2 9.26%
5 TD Securities Inc 241.54 1 3.74%