Persimmon has become the latest house builder to look at prematurely refinancing its debt in an attempt to avoid a possible breach of its banking covenants.
The developer has appointed NM Rothschild, the investment bank, to help it renegotiate terms for its £900m net debt, according to people close to the situation.
Analysts widely expect Persimmon to breach at least one of its banking covenants, relating to profitability against interest cover, in 2009 as the developer faces lower margins and volumes.
The company is using a routine refinancing of its debt, originally set for 2009, to push for new conditions.
Other house builders have typically paid up to 2% extra interest on top of their current deal for such an arrangement, not including an arrangement fee of about 1%.
Such a deal would push interest rates up to about 10% for Persimmon, whose debt pile is expected to be about £700m by the calendar year end.
Some analysts questioned whether such a deal would be available for Persimmon following a deterioration in housing and financial markets since rivals Barratt Developments and Redrow agreed terms.