Asda buyers the Issa brothers and their private equity partners have raised a record sterling junk bond to fund the acquisition.

The Issas and TDR Capital sold £2.75bn of debt through the bond, the Financial Times reported.

The bond is at the heart of a raft of debt arrangements and asset disposals to fund the £6.8bn takeover of Asda, which is the biggest leveraged buyout in more than 10 years.

The approach enables Asda’s buyers to only inject a small amount of equity themselves. However, the bond issue generated orders of more than £8bn from investors who were attracted by what they saw as Asda’s relatively low debt burden and the £9bn of property that supports the deal.

Neuberger Berman senior portfolio manager Vivek Bommi told the FT: “It’s an easy business model and reasonably levered.”

Bond markets have been strong recently, enabling businesses to take advantage of low borrowing costs, especially if – like Asda – they have been resilient during the Covid-19 pandemic.

The Issa brothers and TDR said: “We are pleased to have secured debt financing for the acquisition of Asda at attractive rates, following exceptional levels of investor demand.

“The debt financing forms part of a robust capital structure that we are putting in place for Asda to support and accelerate the growth strategy for the business.”