NEW YORK (Bloomberg) — New Century Financial Corp., the second-biggest US subprime lender, said yesterday it does not have the cash to pay creditors who are demanding their money now, increasing speculation that the company will go bankrupt.Shares of the Irvine, California-based company, already down 90 percent in 2007, lost half their remaining value in pre-market trading. New Century said in a federal filing it doesn’t have funds to give to lenders including Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The creditors want New Century to repurchase all outstanding mortgage loans they financed.

“They’re one step closer to bankruptcy,” said Bose George, an analyst at Keefe Bruyette & Woods in New York who rates the shares “market perform”.

“The only possibility for survival now is for someone, potentially an investment bank, to step in.”

Bose said a rescuer might provide more money in return for a large equity stake.

New Century may be insolvent because too many of its own customers — most of whom have poor credit histories or heavy debt burdens — aren’t repaying their loans. Bad US sub-prime mortgages are at a seven-year high, forcing more than two dozen lenders to close or sell operations. Their woes may contribute to more than 1.5 million Americans losing their homes and 100,000 people losing their jobs, according to real estate executives, economists, analysts and a Federal Reserve governor.

The New York Stock Exchange said in a statement it halted trading of New Century this morning while it decides whether to keep listing the company’s securities in light of the liquidity problems. The shares hadn’t opened as of 1.30 p.m. Bermuda time.

The company’s shares had fallen as low as $1.36 in pre- market trading. Shares of New Century fell on Friday to $3.21, the lowest in eight years.

Financial stocks also could extend their declines on concerns about rising mortgage defaults. Rival lenders including Fremont General Corp., Accredited Home Lenders Holding Co., and NovaStar Financial Inc. have shed more than half their value this year, and Countrywide Financial Corp., the nation’s biggest mortgage company, has tumbled 17 percent.

Accredited fell 22 percent yesterday, Fremont lost 12 percent and NovaStar by 13 percent. Countrywide declined 2.9 percent.

Analysts including Merrill Lynch & Co.’s Kenneth Bruce predicted last week New Century will go bankrupt. New Century has used up cash as rising default rates forced it to buy back loans it sold to investors after borrowers didn’t make their payments. The company said last week it’s in talks with lenders and potential partners about refinancing or “other alternatives.”

New Century’s financing agreements have so-called cross-default provisions that trigger accelerated payments. Should all of its creditors force it to repurchase their loans, the total obligation would be about $8.4 billion, New Century said yesterday.

Talks with lenders are continuing, and it can give “no assurance” that efforts to refinance the debt will succeed, the company said.

New Century has received about $975 million of financing from Morgan Stanley. Part of the money from the New York-based securities firm was used to pay Citigroup Inc. about $717 million on March 8, after Citigroup demanded repurchase of its loans.