HBOS rights issue in jeopardy

by Gill Montia

Story link: HBOS rights issue in jeopardy

HBOS’s £4 billion rights issue looked in jeopardy today as the bank’s share price fell below the proposed offer price of 275p.

Shares in the UK’s largest mortgage lender fell almost 12%, to 258p, as the markets took up the strain of mounting concerns over the UK housing market.

This week’s news on the property sector has included forecasts from analysts in the futures markets that UK house prices could bottom out in 2011 at 50% below today’s prices (in real terms) and data from the Royal Institution of Chartered Surveyors showing that house sales are at their lowest level for 30 years.

Meanwhile, shares in house building firms have plummeted, with Barratt Developments today valued at a mere £200 million.

HBOS has some weeks to go before its cash call but may be forced to follow Bradford & Bingley in a restructure of the fundraising.

The bank says its will be issuing a detailed trading update next week and that its trading performance and mortgage arrears are in line with expectations.