The global financial crisis is pushing Taylor Wimpey into further talks with its lenders as it continues to seek a new financing package to take it through the worst housing market in memory.

The embattled housebuilder yesterday pushed back a target date for concluding debt talks to early next year, potentially only weeks before its covenants are tested with the release of its audited accounts in March.

The group had recently told investors that a new deal with its banks - necessary because it is now facing a breach in its debt covenants - would be signed by the end of the year. Most had expected an agreement by the end of October.

Pete Redfern, chief executive, said: "What we want is a watertight package that would withstand any reasonable scenario."

Taylor Wimpey stressed that the discussions with banks were ongoing and that it still expected to reach an agreement regarding its £1.6bn of net debt. It first admitted to a need for a new facility after an aborted capital raising move in July.

Its shares edged up ¼p at 34¾p, having lost nearly 90 per cent of their value over the past year.

The board blamed the delay on the complexity of its debt. As well as more than £1bn of borrowing from a consortium of banks, the builder has £450m of publicly traded bonds, whose holders are now involved in the negotiation process.

Those bonds, which mature in 2012 and 2019, are trading at nearly half their face value, implying investors see a high chance that the group will either default or negotiate reduced payments. They are rated as "junk" by Fitch Ratings.

The delay is an indication that Taylor Wimpey is seeking flexibility on all of its banking covenants, not just the interest cover aspect that others have focused on.

The bonds are known to have stricter loan-to-value covenants, which track the relationship between borrowings and the value of the group's assets. Taylor Wimpey's main asset, its land bank, could lose up to half its value in the downturn, according to some analysts.

A default in the bonds would automatically trigger a default in the bank debt, the company said.

Redrow and Barratt Developments, two other builders seen to be at risk of breaching conditions on their debt, recently renegotiated financing packages with a focus on cash generation as opposed to earnings.

Lombard, Page 18