Asda Property Holdings is raising £30m with the issue of first mortgage debenture stock. The company said that the issue – which provides 25-year fixed-rate funds at 9.125% – will significantly improve its debt profile.
Asda has a £50m development programme on the go, but finance director Paul Huberman said that the board was reluctant to commit to such a large programme on variable rate money. Of £130m of borrowings, only a third was long-term, fixed-rate debt.
“There is demand for secured lending, but still not many issues,” said Huberman. “Getting in at the front of the queue means we can get the best margins.” Asda had been expecting to pay 125 basis points over benchmark gilts, but the issue was actually priced in the market at 120 basis points.
