Vistry (LSE:VTY) shares dropped sharply at the start of Monday’s session following a Financial Times report that Allianz Trade is reducing the level of credit insurance available to suppliers dealing with the UK housebuilder, potentially adding further pressure to the company’s cash flow.
According to the FT, citing people familiar with the situation, Allianz Trade has informed suppliers in recent weeks that it is revising credit limits relating to Vistry. The changes could result in coverage being reduced by as much as 70%, although the ultimate level of protection will depend on Vistry’s financial performance over the coming weeks.
Vistry shares were down around 7% in London trading by 07:27 GMT.
Credit insurance is commonly used by businesses to protect themselves against the possibility that customers fail to pay for products or services. A reduction in insurance coverage can therefore prompt suppliers to seek payment upfront or impose tighter terms. However, because suppliers can obtain protection from multiple insurers, some may continue trading with Vistry even if their coverage is reduced. The FT said the changes to Vistry’s credit limits apply only to new trading arrangements and will not affect agreements retrospectively.
Questions surrounding Vistry’s credit insurance position emerged last Tuesday after Travis Perkins finance chief Duncan Cooper told analysts during an earnings call that insurance cover had been withdrawn from a “fairly significant national housebuilder.” Discussing pressures affecting the wider construction industry, Cooper said stress could be seen “up and down both parts of the supply chain.”
Those comments contributed to a sharp decline in Vistry’s share price, with the stock ending the session almost 10% lower in London. The FT subsequently reported, citing sources familiar with the matter, that Cooper had been referring to Vistry.
The housebuilder’s shares have now lost nearly 60% of their value over the past year. Its difficulties date back to 2024, when the company disclosed that it had underestimated construction costs, leading to a series of profit warnings. Vistry has since responded by restructuring its management team and implementing measures aimed at reducing costs.
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