Moody's: D.R. Horton outlook positive

Moody's Investors Service said it raised the outlook on D.R. Horton Inc. to positive from stable. At the same time, Moody's confirmed all of the company's existing ratings, including the senior implied rating, issuer rating, and the ratings on the company's senior notes at Ba1 and on its senior subordinated debt at Ba2.

Moody's said the ratings also acknowledge the company's enviable operating performance (105 consecutive quarters of year-over-year earnings growth), success at integrating prior acquisitions, strong equity base, geographic diversity, and tight cost controls.

At the same time, Moody's said the ratings continue to incorporate Horton's somewhat higher-than-average business risk profile given its previously healthy appetite for acquisitions, which its current strategy does not totally disavow. In addition, capacity under its large bank credit facility ($1 billion, with a $250 million accordion) gives the company ample dry powder to releverage the balance sheet on short notice.

Ratings affirmed include the company's B1 rating on its $150 million 8.375% senior notes due June 15, 2004; $200 million 10.5% senior notes due April 1, 2005; $215 million 7.5% senior notes due Dec. 1, 2007; $385 million 8% senior notes due Feb. 1, 2009; $244 million 9.375% senior notes due July 15, 2009 (issued by Schuler Homes and assumed by D.R. Horton in the merger of February 2002); and $200 million 7.875% senior notes due Aug. 15, 2011.

Also affirmed at B1 were the company's $250 million 8.5% senior notes due April 15, 2012; $200 million 6.875% senior notes due May 1, 2013; and $100 million 5.875% senior notes due July 1, 2013. Affirmed at Ba2 were the company's $150 million 9.75% senior subordinated notes due Sept. 15, 2010; $200 million 9.375% senior subordinated notes due March 15, 2011; and $145 million 10.5% senior subordinated notes due July 15, 2011 (issued by Schuler Homes and assumed by D.R. Horton).

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