Asda kicks off £2.75 billion high-yield notes offering in secured and unsecured tranches

By Paul A. Harris

Portland, Ore., Feb. 8 – A £2.75 billion two-part offering of high-yield notes backing the buyout of U.K.-based supermarket chain Asda was launched into the market on a Monday conference call with investors, according to market sources.

The biggest all-sterling deal in the history of the market, it includes £2.25 billion of five-year secured notes (Ba2//BB) with initial price talk in the mid-3% area. Barclays and Deutsche Bank have the physical books.

The offering also includes £500 million of six-year unsecured notes (B1//B+) with initial talk in the high-4% to low-5% area. Barclays and Morgan Stanley are the physical bookrunners for the unsecured notes.

One-on-one management calls continue through Wednesday, and the Rule 144A and Regulation S deal is set to price thereafter.

Barclays will bill and deliver for both tranches of notes.

BofA, HSBC, Lloyds and Rabobank are joint bookrunners, and Commerzbank is the co-manager for both tranches.

The notes in both tranches become callable after two years at par plus the respective coupons.

The borrowing entity will be special purpose vehicle Bellis Acquisition Co. plc.

Debt financing for the buyout also includes an €840 million term loan.

Proceeds from the debt offerings plus equity will be used to fund the acquisition of Leeds-based Asda by the Issa brothers and TDR Capital from Walmart Inc.

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