Asda Buyout Deal to Include Largest Sterling Corporate Bond Sale

The buyout of U.K. supermarket chain Asda Group Ltd. will include the largest sterling corporate bond sale on record.

Brothers Zuber and Mohsin Issa and TDR Capital will present a 840 million-euro ($1 billion) loan to investors today, according to people familiar with the matter. They’ll follow that up with senior secured bonds worth 2.25 billion pounds ($3.07 billion), the largest ever single tranche sterling corporate bond, data compiled by Bloomberg show. The financing will also include unsecured bonds worth 500 million pounds.

The deal arrives as investors are keen to secure higher yields from the debt of sub-investment grade companies, as seen in the strong demand for recent issuance. Appetite in the pre-marketing stage was already very strong, in part due to pent-up investor demand for sterling credit which had soured amid Brexit negotiations, said one of the people who isn’t authorized to speak publicly.

Asda Buyout Deal to Include Largest Sterling Corporate Bond Sale

The debt supports the Issa brothers and TDR Capital’s 6.8 billion-pound acquisition of Asda from Walmart Inc. EG Group has today agreed to buy some of Asda’s assets, comprising its petrol filling stations, car washes and ancillary land, for a headline enterprise value of 750 million pounds.

EG Group Buys Asda Forecourts for Headline Ent. Value GBP750m

“Today’s announcements mark an important step in the purchase of Asda from Walmart by the Issa Brothers and TDR,” Roger Burnley, Asda Chief Executive, said. Spokespeople for TDR and the Issa brothers declined to comment.

The Issa brothers and TDR Capital jointly own global gas station forecourt retailer EG Group, and are well known in the debt market after building up nearly $10 billion of loans and bonds to fund acquisitions.

The financing seeks to raise a total of 3.49 billion pounds. Lenders are asked to commit to the 840 million-euro loan portion of the deal by February 16, the people familiar said. Price talk is expected to be announced in the low 300 basis points over Euribor range, according to one of the people.

Asda is expected to be rated Ba2 by Moody’s Investors Service and BB- by Fitch Ratings, the people familiar said.

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