Wednesday, June 18, 2008
Who will lend them the £2bn they need?
The housebuilding sector suffered another blow yesterday when Taylor Wimpey debt was downgraded to junk status. The downgrade, by credit-rating agency Fitch Ratings, comes amid an unprecedented decline in the housing market. Fitch said Taylor Wimpey, Britain's biggest homebuilder, was likely to suffer a "material reduction" in earnings for at least the next two years. It also raised concerns that the company may be in danger of breaching its banking covenants. Most building firms agree to keep their debt at a certain percentage of their asset values.