Broker snap: Barratt rights issue is likely

17th Aug 2009 12:39

The long awaited rights issue from cash-strapped Barratt Developments could finally be about to happen, according to the Mail on Sunday, with the announcement scheduled to coincide with the housebuilder's full year results.Broker Panmure Gordon believes the report is on the money, otherwise the group's tangible gearing ratio likely to hit a worrying 86% at the year-end, with further write-downs still likely despite signs that the house market is stabilising.'In our view, housebuilders are now at a crucial stage in terms of debt management, with a number of housebuilders (including Barratt) indicating that they will start new sites and may look to re-enter the land market. We continue to believe that Barratt will need to undertake a dilutive fundraising in order to secure its debt position and give it a foothold to start growing again,' the broker said.Panmure Gordon has reiterated its 'sell' recommendation and its target price of 145p.