Paragon plunges amid funding fears

Shares in Paragon Group plunged 45 per cent in early trading on Tuesday after the group, which specialises in buy-to-let mortgages, said it had arranged a £280m stand-by rights issue as it faced short term funding difficulties.

It blamed the “deep turmoil” in the credit market in the wake of the US sub-prime mortgage crisis, which it said had been “immensely disruptive” to its business. This meant it could not renew loan facilities, due to expire at the end of February, except at significantly worse terms.