Duke Street Capital Debt Management, a division of U.K.-based private equity firm Duke Street Capital, has opened a warehouse line with a bank to buy leveraged loans and will be on the road with the notes backing its third collateralized loan obligation next year, explained David Wilmot, a director of Duke Street. The CLO will be called Duchess III and will focus on European and U.K loan assets. He declined to name the underwriter or the size of the fund.
Duke Street does not rule out any sectors to invest in. Indeed, it is required to invest across a number of different sectors to meet diversity targets for the CLOs. "We take a sanguine view. Some bankers avoid retail deals, but our take is, if the deal is well structured, then it's worth looking at," Wilmot said. "Most of the banking community try and take into account how people like us will perceive it," he stated. Duke Street is set up to invest in euro and sterling. The firm can buy dollar-denominated assets, but the deal needs to be well priced to compensate for the hedging swap. As a result the firm avoids U.S. assets, he said.