The debt contagion is spreading and today it is shares in Rich Lister David Coe’s Allco Finance Group which have been crunched by as much as 30%.

Allco are the fast-moving financial engineers which started off owning and leasing assets such as ships, trains and planes but are now trying to replicate the Macquarie Bank model across a range of industries such as transport and power generation. It’s the big property exposures, especially in the US, and about $10 billion of debt which are the biggest concern.

Allco Finance Group shares hit a record high of more than $13 last February as it appeared close to leading the private equity takeover of Qantas.

Today it was in free fall to a four-year low of $3.40 and by late morning it was down $1.14 to $3.66 on fears its sprawling empire of debt-laden funds could be the next victim of this cascading global credit crisis.

I’m a small investor in five of the Allco vehicles and am losing badly on the lot.

For instance, Record Realty is down 1c to 58c today and well off last September’s high of 95c. Allco Max is also down 1c to 37c today but they were trading above 90c last March.

This crisis of confidence all comes together when you look at trading of securities under the code AHUGA. This is $250 million of hybrid debt that David Coe and his friends use to finance their shares in Allco Finance Group, which are held through the Allco Principals Trust (APT).

The AHUGA notes pay interest of $9 a year but I bought 9 of them at $60 each today as they have plunged from $105 last June. When debt securities trade at 60c in the dollar you are talking serious default risk and these numbers explain why.

The Allco Principals Trust (APT) balance sheet is looking pretty sick today because it has $724 million in bank debt and its biggest asset is 45.8 million shares in Allco Finance Group, which at the low of $3.40 today were only worth $156 million.

APT also owns 24.4 million shares in another vehicle Allco HIT (ASX code AHI) – which has today plunged 14c to a record low of 80c and were trading at $4 last March. This holding is today only worth only $20 million.

Surely all this means the big APT margin call is coming, which will really test the private wealth of David Coe and his mates. Allco founder John Kinghorn still has the $600 million in cash he banked from the disastrous RAMS float. Maybe he’ll co-ordinate the rescue.

The news isn’t getting any better across the other debt-laden stock.

Gold Coast financial and property group City Pacific has today withdrawn its takeover proposal for MFS and further clarified its own debt position. Its shares are down 35c to $2.86.

The four MFS stocks are suspended for no explained reason and another, the $9 billion global hedge fund HFA Holdings, has plunged a further 28c to $1.02, so a quick MFS sale of its HFA shareholding isn’t looking too flash.

The great fear in the market is that everyone from David Coe to MFS CEO Michael King are about to suffer big margin calls on their equity exposures. With no reputable institution looking to buy, that just puts a stock into freefall.