Barratt and Persimmon see shares tumble 10% in early trading

House builders’ Barratt and Persimmon have seen their share prices tumble yet again this morning (Friday), with both suffering falls of more than 10% in the first hour of trading.

Taylor Wimpey fared somewhat better, down just 2.3%, but that follows a torrid time yesterday as shares tumbled 16% as a result of one stockbroker voicing doubts over its ability to refinance its £1.7bn net debt.

However Chris Millington, analyst at Numis Securities, took a different view, saying that there was nothing new relating to TW’s general position.

“We’ve seen its share price falling every day for the last four months,” he said. “There is just so much speculation: the likelihood of it breaking its covenants; the pension deficit; and its lack of competitiveness in comparison with competitors.

“In general, there is a continuing risk aversion and the whole house building sector is 10% down.”

Much is being made of one particular portion of TW’s borrowings, namely the £450m of debt that is in the form of traded Eurobonds as some of the Eurobond holders are seen as deliberately making themselves uncontactable, thus blocking all dialogue with the house builder.

Millington said: “Banks clearly have some moral obligations not to close on companies but a Eurobond holder sees things differently and he or she can be more militant in forcing a situation. We have yet to see if these holders are militant – in fact they may turn out to be supportive.”

Share price falls amongst the house builders before 10am this morning were:

• -10.9% Persimmon
• -10.1% Barratt
• -7.0% Bellway
• -2.3% Taylor Wimpey

Other construction companies were also in the mire as price slides showing on the screens were:

• -11.4% Carillion
• -7.3% Atkins
• -6.9% Balfour
• -5.5% Ashtead
• -5.0% Morgan Sindall