Vistry shares slide 9% as Allianz Trade cuts supplier cover 70%

Vistry Group shares fell 9% to 258p after Allianz Trade cut credit insurance cover for the housebuilder's suppliers by as much as 70%, the latest sign of strain across the UK construction sector.

"Our credit insurers continue to provide substantial cover for our supply chain, which more than meets the group's requirements on an ongoing basis," a Vistry spokesperson said, adding that no supplier had withdrawn trade and there had been no interruption to deliveries.

Allianz Trade reduced credit limits by as much as 70% on new trading agreements in recent weeks, according to the Financial Times, citing people familiar with the decision. The changes were communicated privately to individual suppliers and apply only to new agreements, with the final level of cover depending on Vistry's financial performance in the coming weeks. Allianz Trade declined to comment.

Trade credit insurance protects suppliers against non-payment, so reduced cover can prompt them to demand cash upfront rather than extend normal payment terms, hitting a client's cash flow with little warning. Because credit insurance is often placed across multiple carriers, suppliers to Vistry may still be able to trade even without Allianz Trade's cover.

The pullback exposes the cash-flow pressure building across the UK housing market, where construction recorded 3,851 insolvencies in England and Wales in the 12 months to February — about 17% of all cases with an identified industry, despite the sector accounting for just 6% to 7% of gross value added, according to Tokio Marine HCC.

Credit cover cut as Vistry posts £30 million first-half loss

Vistry's difficulties 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 posted a £30 million pre-tax loss in the first half, and chief financial officer Tim Lawlor is leaving for another role. Adam Daniels, who takes over as chief executive in April, has been selling properties at a discount and delaying construction work to shore up cash, and accelerated supplier payments in 2026 after paying suppliers in an average of 41 days last year.

The company has guided to materially improved cash and profit in the second half and reiterated that it expects net cash above £100 million by year end, easing earlier concerns about a potential capital raise. Vistry shares have fallen almost 80% over the past two years.

Construction contraction deepens across the sector

The S&P Global/CIPS UK Construction PMI stayed below the 50-point growth threshold for 15 consecutive months to March, the longest unbroken contraction since the financial crisis. Begbies Traynor's Red Flag Alert recorded 67,369 companies in critical financial distress in the fourth quarter of 2025, up 43.8% year on year, with construction flagged as particularly vulnerable.

The Bank of England has held its base rate at 3.75% for five consecutive meetings, while average two-year fixed mortgage rates have climbed above 4.8% this year from about 3.6% in January, according to Savills, which forecasts a 2% fall in UK house prices over 2026.

Although formal trade credit claims stayed relatively low into mid-2026, late payment notifications to insurers have been rising across several sectors, a pattern that has historically preceded a claims increase by two to three quarters. That gap gives suppliers time to diversify credit insurance panels or seek invoice financing before conditions tighten further.

The pressure now showing up in Vistry's supply chain is unlikely to be the last case this year. If additional insurers follow Allianz Trade's lead or Vistry's second-half cash guidance disappoints, suppliers could demand upfront payment, tightening the housebuilder's working capital just as mortgage costs weigh on demand.

This article is for informational purposes only and does not constitute investment advice.