(Bloomberg) -- Subway is tapping the asset backed securities market for the second time this year as the sandwich restaurant chain looks to borrow $2.3 billion.
The company, which has the most restaurant locations of any chain in the US, was purchased by Roark Capital Group in a buyout that closed in April. In May, it sold $3.35 billion of bonds backed by assets including fees from its franchisees, the largest securitization of its kind.
Companies with a large network of chains, like gyms and fast-food franchises, often raise capital in the whole business securitization market. This pathway offers firms better rates in exchange for giving investors more control, which is doable because of the structure of the business model.
Subway’s latest asset-backed sale is being led by Barclays Plc and Morgan Stanley, according to people with knowledge of the sale. It includes restaurants worldwide. The transaction is refinancing a term loan. Subway also issued a variable funded note valued at $400 million earlier this year.
At its current size, the deal would be the fourth largest whole business securitization, after Subway’s other offering and two transactions from Dunkin’ Brands Group Inc. About a dozen whole business securitizations have already been sold this year totaling more than $8 billion, including Zaxby’s, a chicken finger restaurant chain, and Nothing Bundt Cakes, a bakery chain.
Issuance in the broader ABS market is running hotter than last year as well. Sales were at about $242 billion through the end of last week, compared with around $192 billion for the same period last year.
Representatives for Barclays and Morgan Stanley declined to comment. Subway didn’t respond to a request for comment.
The prior record-setting deal from Subway saw elevated investor demand. At the time, investors placed nearly $20 billion in orders on the $3.35 billion of bonds for sale.
--With assistance from Charles Williams.
(Updates with deal details starting in the third paragraph.)
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