Vistry Group PLC (LSE:VTY) shares fell 9% to 258p after a report that one of Britain's largest trade credit insurers could cut cover for the housebuilder's suppliers.
Allianz Trade could reduce credit limits by as much as 70% on new trading agreements, according to the Financial Times, citing people familiar with the decision.
Trade credit insurance protects suppliers against non-payment, and reduced cover can prompt them to demand cash upfront rather than extend normal terms.
The changes were reportedly communicated privately and apply only to new agreements, with the final level of cover dependent on Vistry's financial performance in the coming weeks.
A Vistry spokesperson told the paper its credit insurers continued to provide substantial cover that more than met the group's requirements, adding that no supplier had withdrawn and there had been no interruption to supply.
The matter surfaced only when Duncan Cooper, finance director of Travis Perkins (LSE:TPK), told analysts that credit insurance had been pulled from a large national housebuilder, which he did not name.
Vistry's troubles date to 2024, when it admitted underestimating building costs and issued a run of profit warnings that triggered a management overhaul.
The FTSE 250 group has since guided to stronger cash and profit in the second half and reiterated that it expects net cash above £100 million by the year end.
The wider backdrop is unforgiving, with construction recording 3,851 insolvencies in England and Wales in the 12 months to February, around 17% of all cases where an industry was identified.
The sector's purchasing managers' index, a monthly gauge of activity, stayed below the 50 mark dividing growth from contraction for 15 months to March.
