Asda has announced the refinancing of £3.2 billion of debt following “strong demand” from investors.

The move will see the majority of Asda's maturities pushed into the next decade.

The decision comes after the supermarket ended 2023 with a debt pile of £3.8 billion following its buyout of EG Group last year.

Asda acquired the company for around £2.3 billion, taking over its 350 petrol stations and over 1,000 food-to-go locations across the UK and Ireland.

At the time, trade union GMB urged business and trade secretary Kemi Badenoch to encourage the Competition and Markets Authority (CMA) to investigate the deal, claiming that the merger could add over £7 billion to the supermarket's existing debt.

Asda's refinancing, which completed on Thursday, included its biggest Sterling high-yield bong this year and the “second-largest sterling bond in the European leveraged finance market".

Asda said that strong investor demand enabled the supermarket to raise £1.75 billion of senior secured notes and upsize by more than £200 million on a £900 million Equivalent EUR Term Loan B (TLB), bringing the final size to £1.1 billion equivalent.

The maturities of the new senior secured notes and TLB are 2030 and 2031 respectively.

As part of the £3.2 billion refinancing, Asda used around £300 million of balance sheet cash to reduce gross debt.

It also extended the maturity of its revolving credit facility from August 2025 to October 2028 and was able to upsize this facility from £667 million to £748 million in connection with the wider refinancing.

“We saw strong demand from investors after taking a thoughtful and prudent approach to refinancing our near-term debt well ahead of maturities – to further strengthen our balance sheet,” said Asda chief financial officer (CFO) Michael Gleeson.

The CFO went on to say that investor backing followed strong full-year results for 2023 and a recent upgrade by Moody’s of its corporate rating to B1 from B2.

Asda last week announced a 24 per cent increase in Adjusted EBITDA after rent to £1.1 billion in its full-year results for 2023, as well as a 5.4 per cent rise in like-for-like sales.

“The refinancing also reflects the wider strength of Asda as a diversified retail group with a strong grocery business at its core supported by a fantastic non-food offering in George and following recent investments, a major presence in the high-growth convenience and food-service markets,” continued Gleeson.

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