Housebuilder said to be 'comfortable' with new deal despite City speculation
Barratt is not in danger of breaching its recently negotiated banking covenants, according to sources close to the talks between the housebuilder and its banks.
The assertion follows claims by some in the City that falls in house prices would trigger a breach of cashflow covenants, which were agreed in July.
A senior source close to the process said: 鈥淭he story is wide of the mark. Barratt negotiated a package that was subject to significant stress testing and one in which all parties remain very comfortable can accommodate current and future market trends.
鈥淥ne could only wish the more sensationalist equity analysts could be similarly stress tested.鈥�
Barratt鈥檚 cashflow covenants replaced interest cover covenants amid fears about the group鈥檚 profitability in the downturn.
Another source said: 鈥淭hey were made very, very wide.鈥�
Following the company鈥檚 results last week, Alastair Stewart, an analyst at Dresdner Kleinwort, said: 鈥淥nce again, Barratt's worst case isn鈥檛 worse enough. We see further writedowns and risk of breaching covenants.鈥�
A Barratt spokesman added: 鈥淎t our results eight days ago management made it clear that it was comfortable with the greater headroom which the successful renegotiation of our banking covenants has given the company.鈥�
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