Moody's to review Horton, Ryland ratings |
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Published
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Wed, 31 Oct 2007 20:01
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NEW YORK (AP) - Moody's Investors Service on Wednesday placed all of the ratings of homebuilders D.R. Horton Inc. and Ryland Group Inc. under review for possible downgrade.The ratings under review include the 'Baa3' rating on both companies' senior unsecured notes and the 'Ba1' rating on Horton's senior subordinated notes. A rating of 'Baa3' is the lowest investment grade, so a downgrade would push the securities to junk status. A 'Ba1' rating is one notch below investment grade.Moody's said the review will focus on the companies' ability to reduce actual inventories of homes going forward and their ability to continue generating positive cash flows.To date, Horton's inventory reduction has taken place through accounting charges, such as impairments, Moody's said, and Ryland's actual reduction trails that of industry leaders such as KB Home and NVR Inc.Moody's will also assess whether the companies can reduce costs sufficiently to once again sustain profitable operations, and whether they will take the necessary steps to conform their debt structures.D.R. Horton shares fell 6 cents to $13.13 in afternoon trading. Ryland shares dropped 25 cents to reach $28.76.Copyright 2007 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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Moody's may downgrade ratings on home builders D.R. Horton, Ryland 