Fitch downgrades or affirms 14 homebuilders

Fitch Ratings said it took action on 14 homebuilders on Friday:

• It affirmed Beazer Homes USA, Inc.'s issuer default rating at B-, senior notes at CCC+/RR5, convertible senior notes at CCC+/RR5, junior subordinated debt at CCC-/RR6 and secured revolving credit facility at BB-/RR1. The outlook is negative;

• It downgraded Centex Corp.'s issuer default rating, senior unsecured notes and unsecured bank credit facility to BB from BB+ and affirmed its B short-term issuer default rating and commercial paper. The outlook remains negative;

• It downgraded D.R. Horton, Inc.'s issuer default rating, senior unsecured debt and unsecured bank credit facility to BB from BB+ and its senior subordinated debt to B+ from BB-. The outlook remains negative;

• It affirmed Hovnanian Enterprises, Inc.'s issuer default rating at B-,
senior secured revolving credit facility and senior secured notes at BB-/RR1; 
senior unsecured notes at B-/RR4, senior subordinated notes at CCC/RR6 and series A perpetual preferred stock at CCC-/RR6. The outlook remains negative;

• It downgraded KB Home's issuer default rating, senior unsecured debt and unsecured bank credit facility to BB- from BB+ and senior subordinated debt to B from BB-. The outlook remains negative;

• It downgraded Lennar Corp.'s issuer default rating, senior unsecured debt and unsecured bank credit facility to BB+ from BBB- and its short-term issuer default rating and commercial paper to B from F3. The outlook remains negative;

• It downgraded M/I Homes, Inc.'s issuer default rating to B from B+, senior unsecured debt to B+/RR3 from BB-/RR2 and series A non-cumulative perpetual preferred stock to CCC/RR6 from CCC+/RR6. The outlook remains negative;

• It downgraded M.D.C. Holdings, Inc.'s issuer default rating, senior unsecured debt and unsecured bank credit facility to BBB- from BBB. The outlook is stable;

• It affirmed Meritage Homes Corp.'s issuer default rating at B+, senior unsecured debt at BB-/RR3 and senior subordinated debt at B-/RR6. The outlook remains negative;

• It affirmed NVR, Inc.'s issuer default rating, senior unsecured debt and unsecured bank credit facility at BBB. The outlook is stable;

• It downgraded Pulte Homes, Inc.'s issuer default rating, senior unsecured debt and unsecured bank credit facility to BB+ from BBB-. The outlook remains negative;

• It downgraded Ryland Group, Inc.'s issuer default rating, senior unsecured debt and unsecured bank credit facility to BB from BB+. The outlook remains negative;

• It affirmed Standard Pacific Corp.'s issuer default rating at B-, secured borrowings under its bank revolving credit facility at BB-/RR1, unsecured borrowings under its bank revolving credit facility at B-/RR4, senior unsecured debt at B-/RR4 and senior subordinated debt at CCC/RR6. The outlook is stable; and

• It downgraded Toll Brothers, Inc.'s issuer default rating, senior unsecured debt and unsecured bank credit facility to BBB- from BBB and its senior subordinated debt to BB+ from BBB-. The outlook is stable.

The agency said the ratings reflect the current very difficult housing environment, Fitch's expectations that housing activity will be even more challenging than previously anticipated throughout 2009, negative trends in operating margins, further deterioration in credit metrics, erosion in tangible net worth from non-cash real estate charges and, for some companies, operating losses that have led to high debt leverage.

The outlook remains stable for four companies. Their respective ratings are supported a strong liquidity position (M.D.C.); by strong credit protection measures, solid free cash flow generation and balance sheet liquidity that results from a unique operating model (NVR); a strengthened balance sheet and improved liquidity position resulting from a recent equity investment and rights offering (Standard Pacific); and a well-entrenched market position as the pre-eminent builder of luxury homes and relatively stable debt-protection measures (Toll Brothers).

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