Next funds expansion with £300m bond

Fashion group Next has successfully pulled off a£300 million sterling bond issue, its first for more than 15 years.

The issue was more than twice oversubscribed, and enables the retailer to restructure funding for store expansion and share buybacks.

These investments are designed to deliver the twin objectives of a profitable increase in selling space - sustaining business momentum - and enhanced earnings per share to please investors.

The bond issue was an important element in creating the most efficient capital structure for Next, said group treasurer Andrew Jones.

Last year, Next increased trading space by 18 per cent to 217,200 sq m and this year the objective is a rise of at least 37,000 sq m.

Jones would not reveal the split between stores and buybacks from the bond, but Next has previously insisted: 'The primary use of capital will continue to be investment in the development of our core businesses. We do not see share buybacks as an alternative to capital investment.'

Barclays Capital acted as a bookrunner on the bond issue. Andrew Whittaker, Barclays Retail & Wholesale team relationship director for Next, said: 'The name recognition and first-class credit story of Next helped ensure that this transaction will be the one against which other retailers benchmark themselves.'

Bonds have become increasingly popular with investment institutions, particularly pension funds, in the wake of turbulent equity markets.

Next's bond matures in September 2013.