Taylor Wimpey debt downgraded yet again
- Published: 18 July 2008 09:33
- Author: Alasdair Reisner
- More by this Author
- Last Updated: 22 July 2008 10:53
- Reader Responses
Debt rating agency Fitch Ratings has downgraded Taylor Wimpey's debt again as the firm battles against the collapse of the housing sector.
In technical terms TayWimp's Long-term Issuer Default and senior unsecured rating has fallen back to 'BB-' from 'BB'.
Last month Fitch downgraded TayWimp ratings to long-term issuer default and senior unsecured BB+ from BBB, cutting again to BB at the start of the month.
Effects of the downgrade could include the house builder having to pay higher interest costs, or having more difficulty finding buyers for its debt.
The downgrade reflects Fitch's fears about the house builder's short term financial flexibility after attempts to rise up to £500 million from investors failed.
TayWimp now risks breaching its lending covenants next February, as it attempts to renegotiate with its lenders over its debts.
A statement from the debt firm said: "Fitch believes the lack of new equity impairs Taylor Wimpey's financial flexibility, given that the company will now find it harder to successfully renegotiate its covenants with its banks and investors."
Further downgrades are anticipated if these negotiations fail or are delayed.
