Sources close to the refinancing talks between Barratt and its lenders have dismissed speculation that covenants will need to be retested because of accounting rules
The housebuilder’s share price plunged 12% last week after Citigroup analyst Clyde Lewis said the company may breach banking covenants because tax repayments from land writedowns could not be added to its balance sheet.
A source close to the talks said: “The banks remain highly confident the company will continue to perform without revisiting the covenants.
“The banks were fully aware of the impact of land writedowns and the effect of deferred tax assets when the covenants were set.”
Barratt agreed new covenants on its £1.42bn debt pile last July.