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Asda’s weak festive trading has resulted in a sell-off in its bonds and loans as investors grow increasingly concerned about the supermarket chain’s ability to turn around its performance, according to the Financial Times.
The price of Asda’s traded debt has been falling since November, with losses accelerating this year after industry data showed the retailer suffered the steepest sales decline among major UK supermarkets over the festive period.
Sales at the private equity-owned chain fell 6.5% in December, according to figures from Nielsen IQ, while all of its main rivals recorded growth.
The FT reported that a €1.3bn (£1.13bn) term loan issued in 2024 has fallen to a record low of 88 cents (76p) on the euro, down from 96 cents (83p) in November.
Meanwhile, €700m (£606.3m) of bonds due to mature in 2031 have slipped to 94 cents on the euro, having traded at par as recently as October.
Debt investors are concerned about Asda’s high leverage and weakening trading, even as it invests heavily in price cuts that could limit its ability to raise more capital.
Asda saw its sales fall 4.3% in the run-up to Christmas, according to Worldpanel data, while the retailer’s market share fell by 0.9 percentage points to 11.5% over the quarter.
An Asda spokesperson said: “We are in the early stages of a transformation and are making progress where it matters most for our customers by helping them save money on their grocery shop. Independent price comparisons showing Asda is the lowest-priced traditional supermarket undercutting competitors’ base and loyalty prices. This focus on value is beginning to be reflected in stronger volumes over recent periods.
