Analysts predict Persimmon rights issue

Persimmon is the housebuilder most likely to continue the recent trend for rights issues, according to two City analysts.

Charlie Campbell, at Liberum Capital, said shareholders would welcome a move that could pay off most of the company’s £600m debt.

It would follow rights issue announcements at property groups Hammerson and British Land.

The company is currently renegotiating a refinancing deal on the debt as covenants are expected to be breached this year.

Campbell said: “A rights issue would be in keeping with management style. Persimmon had five rights issues between 1986 and 1996, and its management has been acquisitive. It would be an appropriate way for management to broaden its options going forward, as its options are currently constrained by the need to pay down debt.”

His views were echoed by UBS, which said the move would enable the company to restock its land at, or close to, the bottom of the cycle.

Campbell dismissed the chances of similar moves at Taylor Wimpey, Barratt or Redrow due to the low share price and said it was too early for Bovis Homes. He said Berkeley and Bellway had access to cash or bank debt and didn’t need to tap the market for cash.