Top credit insurers have reduced their coverage for suppliers to embattled UK housebuilder Crest Nicholson, signaling substantial challenges in an industry beset by sluggish demand and rising costs. Coface and Allianz Trade reduced their exposure to Crest in recent months, while Atradius has not been extending any new cover on Crest for more than a year. Suppliers to housebuilders buy credit insurance to protect themselves if customers fail to pay for goods and services. When coverage is withdrawn, suppliers may demand payment upfront, which can squeeze cash flow.
Separately, Atradius and Coface have stopped writing new cover for Vistry, another UK housebuilder. The cuts come at a challenging time for both companies. Crest cut its earnings forecast for the second time in four months and lowered housing delivery projections, while extending talks with lenders over amending bank covenants. Vistry is prioritizing generating cash to pay down debt, including selling properties at a discount and delaying construction work.
Crest Nicholson said credit insurers are providing more than sufficient cover and there is no impact on its ability to trade. Vistry said multiple credit insurers continue to provide substantial cover for its supply chain. Tokio Marine was offering new coverage of Vistry to pick up market share as others rowed back.
Source: Financial Times Companies · Summarized by HeadlinesBriefing