This thesis describes the design and initial optical design, layout and testing of a nulling polarising interferometer for observation of CMB spectral distortions called BISOU (Balloon Interferometer for Spectral Observations of the Universe) which is a pathfinder balloon experiment for future proposed space missions such as FOSSIL, a current ESA M7 mission proposal. Firstly, the background of spectral distortions and a justification of the proposed science are given based on discussion of previous mission proposals. Various example initial designs are analysed using TICRA GRASP, which is a commercial physical optics simulation software. Then in Chapter 4 an analysis technique known as Gaussian beam mode analysis (GBMA) is introduced. GBMA allows the tracking of beam parameters (the beam radius, radius of curvature, and phase slippage) and allows an alternative technique to analyse truncation or loss of power due to finite sized optical components in BISOU. GBMA has different assumptions/approximations compared to Physical Optics, so GBMA is a useful technique for verifying the output from GRASP. A truncation analysis of BISOU optical designs using Laguerre-Gaussian and Hermite-Gaussian beam modes is introduced in Chapter 5. Values obtained from this technique are compared with spillover values taken from GRASP. A modal analysis of example beams from conical horns and pyramidal multimoded horns is then performed to check for aberration/distortion of the beam as it propagates through the system. This multimoded analysis of the BISOU optics will be critical to analyse the throughput and optical performance of BISOU from 90 to 1500 GHz where its full multimoded behaviour will need to be incorporated into future optical models.