Asda faces £30m rise in debt costs as Mohsin Issa grilled by MPs

The billionaire brothers took out loans to pay for the £6.8bn purchase of the supermarket and have faced an increase in borrowing costs over the last 18 months.

Mohsin Issa told MPs on the business and trade select committee that Asda is financially stable and gives “confidence that it is run properly”.

“What I would say is that the debt leverage at the start of the year was at 4.2 times, that has gone down to 3.8 times and that trajectory is to go down even further by the end of this year,” he said.

“At the same time, we are investing in colleague pay, customer pricing and loyalty. The business is highly cash generative.”

Issa also defended the running of the company and said it had “chosen to invest in customers”, including spending £140m on price cuts to help with the cost of living, at the expense of profits.

Asda chief financial officer Michael Gleeson told MPs that within the Asda company hierarchy, total debt was at £4.2bn.

Of that total, £500m will be due in February and change to a floating rate that will add a minimum of £30m to financing costs. He added that the remainder of the debt is fixed until February 2026.

Gleeson also defended the use of holding companies based in Jersey, emphasising that Asda pays UK corporation tax on all its operations.

He said: “Companies registered in Jersey can, in the longer term, facilitate corporate restructurings more quickly than can happen in England and Wales.”