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Jockey Club's 4.75% retail bond open for another 10 days after take-up romps past £15m target

Investors have 10 more days to put money into a 4.75 per cent retail bond launched by the Jockey Club last month, it was announced today.

Take-up of the bond has raced through its £15million target as investors flocked to the offering, which the UK racecourse owner created to raise money for the redevelopment of its flagship Cheltenham course.

It revealed today that 1,500 applicants have invested in the new bond which was designed for a ‘racing audience’.

Popular flutter: Investors have flocked to the Jockey Club bond, which offers interest and a host of other horse racing-related perks

The bond offers investments of between £2,000 up to £100,000 over a minimum five-year term for a fixed annual return which offers 4.75 per cent cash and 3 per cent in racing rewards such as tickets and hospitality.

The Jockey Club said the most common amount invested was £10,000 while more than 35 applications have been for the maximum £100,000.

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It says it is ‘delighted’ with the interest the bond has generated. As a result, it has extended the application window for the bond by 10 days, until May 28.

A number of companies have offered retail bonds in recent times, including Hotel Chocolat, John Lewis and Mr & Mrs Smith, while Nuffield Health launched one earlier in the week paying six per cent.

The Jockey Club says that its bond has proved the second most successful offering after John Lewis, with £16million so far raised.

The launch of the bond comes at a time when savers are struggling to make any real returns on their money amid the low interest rate environment.

Savings rates have plummeted following four years of record low interest rates. The situation has worsened in recent months as the £80billion Funding for Lending scheme, which was designed to help borrowers by giving lenders access to cheap finance, has made lenders less reliant on attracting savers' cash.

However, those backing the Jockey Club bond are not protected by the savings safety net, the Financial Services Compensation Scheme. This covers each individual to the tune of £85,000 held in UK-regulated banks and building societies, if they go bust.

Both the cash interest and rewards points are also taxable.

The Jockey Club, which also owns Aintree and Newmarket racecourses, is governed by Royal Charter, so reinvests all profits back into its sport.

Founded in 1750, the club has said it generated its largest ever turnover in 2012 at £150.3million and made operating profits of £19.8million. The group's turnover grew eight per cent year-on-year, while operating profits were up three per cent.

Paul Fisher, group managing director of Jockey Club Racecourses, said: ‘To raise more than £15million and counting in just over three weeks from our first foray into consumer finance makes us incredibly proud and I look forward to repaying the trust racing fans and investors have shown in our group.’

WHAT DO YOU NEED TO KNOW BEFORE BUYING COMPANY BONDS?

Research all recent reports and accounts from the issuer thoroughly. You can find official stock market announcements including company results on This is Money here.

Check the company's cash flow is healthy. Also look at the interest cover - the ratio which shows how easily a firm will be able to meet interest repayments on its debt. This is calculated by dividing earnings before interest and taxes (known as EBIT) by what it spends on paying interest. A guide to doing investment sums like this is here.

Find out what the bond debt is secured against, and where you would stand in the queue of creditors if the firm went bust. This should be included in the details of the bond issue but contact the company direct if it is unclear.

Consider whether to spread your risk by buying a bond fund, rather than tying up your money with just one company.

Inexperienced investors who are unsure about how corporate bonds work or their potential tax liabilities should seek independent financial advice. Find an adviser here.

If the interest is what attracts you to the bond, weigh up whether it is truly worth the risk involved. Generally speaking, the higher the rate on offer, the higher the risk.

Investors should bear in mind that it can be harder to judge the risk involved in investing in some company bonds than in others - it is easier to assess the likelihood of Tesco going bust than smaller and more specialist businesses.

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