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Asda sets price talk in historic, hugely oversubscribed £2.75 billion buyout bond deal
By Paul A. Harris
Portland, Ore., Feb. 10 – Price talk surfaced Wednesday on a £2.75 billion two-part offering of high-yield notes backing the buyout of U.K.-based supermarket chain Asda, 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) talked to yield 3¼% to 3½%, tight to initial guidance 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+) talked to yield 4% to 4¼%, deep inside of initial guidance in the high-4% to low-5% area. Barclays and Morgan Stanley are the physical bookrunners for the unsecured notes.
The deal is hugely oversubscribed, according to information supplied by the dealers.
The £2.75 billion overall amount of notes on offer is playing to £8.25 billion of orders across both tranches, with the greatest amount of investor interest in the secured tranche, with £5.5 billion of orders in the book. The £500 million unsecured tranche, meanwhile, is playing to £2.75 billion of orders, dealers say.
The Rule 144A and Regulation S deal is set to price later on Wednesday.
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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