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Issa brothers junk bond sale raises £2.75bn

The junk bond received over £8bn of investor orders

The Issa brothers, Asda’s billionaire buyers, have raised a record-breaking £2.75bn through a sterling junk bond, as investors continue to back the UK’s largest leveraged buyout in over a decade.

Moshin and Zuber Issa, together with private equity firm TDR Capital, are set to acquire the supermarket chain for £6.8bn, facilitating the deal through a set of debt deals and asset disposals.

The latest junk bond, which garnered interest from over £8bn worth of investors, is the focal point in a structure that allows the brothers to use only a small portion of their own equity in the deal.

The Issa brothers and TDR said in a statement, via the Financial Times: “We are pleased to have secured debt financing for the acquisition of Asda at attractive rates, following exceptional levels of investor demand.

“The debt financing forms part of a robust capital structure that we are putting in place for Asda, to support and accelerate the growth strategy for the business.” 

Paired with Asda’s record-breaking assets-backed secured tranche of £2.25bn, the deal shows the recent spike to the scale of borrowing in the sterling high-yield bond market.

Na Wei, managing director at Barclays, who led the deal, told the Financial Times that this transaction has “definitely opened people’s minds in terms of the art of the possible”.

The Blackburn-based brothers and TDR Capital struck the deal to acquire Asda from its current owner Walmart in October.

However, Walmart will retain an equity investment in the business, also holding a seat on the board.

Retail Sector has contacted TDR Capital for further comment.

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