Taylor Wimpey suffers on Black Monday 2

Taylor Wimpey was one of the biggest casualties yesterday as the FTSE 100 took its biggest one-day percentage slump since Black Monday in 1987. The housebuilder's shares were down 20% to 28p

The Financial Times this morning explains that investors reacted to Friday’s late news that credit agency Fitch had downgraded TW’s credit rating on its senior unsecured debt BB-minus status to a B.

The move takes TW’s status further away from “investment grade” and deeper into “junk bond” territory

“The move followed Friday’s announcement that Taylor Wimpey’s eurobond creditors would be part of its covenant renegotiation process, in addition to bank and US private placement creditors,” says the FT.

It adds a warning from Fitch that “this process is progressively moving towards a work-out scenario.”

The FTSE 100, the London Stock Market’s blue-chip index, was down by 7.9% yesterday.

And looking further beyond that the FTSE 250, which covers the fortunes of the biggest 250 players, dropped by 6.5%.