Moody's may cut Centex, Lennar and Pulte

Moody's Investors Service said it placed the ratings of Centex Corp., Lennar Corp. and Pulte Homes, Inc. under review for downgrade.

Centex has a Baa2 rating on $3.7 billion of senior unsecured notes and P-2 rating on $1.25 billion commercial paper program. Lennar has a Baa2 rating on $2.2 billion of senior unsecured notes and P-2 rating on $2 billion commercial paper program. Pulte Homes has a Baa3 rating on $3.48 billion of senior unsecured notes.

The review was prompted by the materially weaker operating environment for homebuilders, the dramatic change in the industry credit environment from a few weeks ago and the possibility of a substantive spill-over effect if the blowback from the structured products markets continues unabated, according to the agency.

The review will focus on the companies' ability to cut inventory, generate positive cash flow, reduce costs, conform their debt structures and reverse underperforming key credit metrics before 2009.

Moody's said it would likely lower Pulte's ratings by one notch and remove the ratings from review. The agency said it would likely downgrade Lennar and Centex by one notch and keep the ratings on review for further downgrade or lower them by two notches and remove them from review.

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