黑洞社区

The City has dismissed fears that Barratt is on the verge of breaching its banking covenants after its 拢2.1bn acquisition of Wilson Bowden last April.

Earlier this week the 拢3bn-turnover housebuilder denied speculation that it would have to cut back its land buying or carry out a rights issue to help pay the 拢800m it borrowed to fund the purchase.

Barratt has said its debt is 拢1.7bn but according to Rachel Waring, an analyst with Panmure Gordon, it has about 拢500m headroom before it exhausts its debt facility of 拢2.3bn.

Chris Millington, an analyst at Numis, said: 鈥淧eople are getting very nervous about the housing market at the moment and because Barratt has got the highest debt of any housebuilder, it is being picked on. It is still some way off breaching its banking covenants.鈥�

Kevin Cammack at Kaupthing agreed. 鈥淏arratt and Taylor Wimpey are the most vulnerable to a breach of covenant, owing to their recent acquisitions but that doesn鈥檛 mean it鈥檚 going to happen,鈥� he said. 鈥淭he worst case scenario is that Barratt will refinance the debt or stop buying land for a short time.鈥�

Because Barratt has the highest debt of any housebuilder, it is being picked on

Chris Millington, Numis

Investors agree, as after an initial fall, Barratt鈥檚 share price rallied to 415p on Tuesday 鈥� up 13p on a week earlier.

A Barratt spokesperson said: 鈥淲e do not understand the stories, in the light of our recent trading update in which we made it clear we were operating well within our facilities. We also made it clear that we will still have spent 拢1.2bn on land in the current financial year.鈥�

Some observers questioned the wisdom of Barratt鈥檚 acquisition of Wilson Bowden, which was bought before the market faltered at the back-end of last year.

Barratt鈥檚 market capitalisation is now 拢1.4bn, 30% less than the 拢2.1bn it paid for Wilson Bowden alone.