The turmoil on global debt markets claimed another victim today when Whitbread revealed that it was delaying a possible £1 billion bond issue.

The Premier Inn-to-Costa Coffee group said that while it fully intended to raise new debt, secured against its hotels and restaurants, the move would be “foolish” in current market conditions.

Christopher Rogers, finance director, said: “The propensity to lend to anyone but a sovereign government is very low at the moment. Our advisers told us 'unless you have to, our advice is that you shouldn't go at this time'."

Russia’s Gazprom, India’s Power Finance Corp and UAE-based Dana Gas have all delayed bond issues in the past month, blaming high yields or weakness in global credit markets.

Whitbread’s bond issue had been expected to provide the bulk of a widely-expected £900 million cash return to shareholders.

The group would only commit to starting a £300 million share buyback programme, funded largely by the proceeds from the sale of David Lloyd Leisure in June.

It refused to quantify the potential size of the bond issue but analysts said it could easily surpass £1 billion, providing the funds for a special dividend and extra cash for the continued expansion of Premier Inn and Costa Coffee.

Whitbread has said that it wants to increase its leverage to five times underlying earnings, a target of around £1.8 billion.

Alan Parker, chief executive, said an update would come at interim results in mid-October. He added: “We have been advised it would be foolish to go at this time, but we are talking a matter of weeks here.”

Despite the setback, shares in the group climbed nearly 4 per cent, or 57p to 1615p, after a trading statement revealed that sales growth was accelerating across the Whitbread estate.

Premier Inn registered like-for-like growth of 12 per cent in the 11 weeks to August 16 with sales at Costa Coffee up 10.2 per cent. Group like-for-like growth was 7.8 per cent.

Mr Parker said Premier Inn’s performance was “sparkling” and the chain admitted it could follow Costa Coffee into China. He said: “China could well be an opportunity, we have a number of irons in the fire.”

Geof Collyer, analyst at house broker Deutsche Bank, upped his full-year earnings forecast by 10 per cent.

He added: “Everyone is grown up and knows what is going on in the debt markets. When they reopen, Whitbread will be at the front of the queue.”

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