Moody's: Toll outlook negative

Moody's Investors Service said it affirmed Toll Brothers, Inc. and Toll Brothers Finance Corp.'s ratings, including the Baa3 rating on existing senior note issues and Ba2 rating on subordinated note issue.

The outlook was changed to negative from stable.

The negative outlook reflects Moody's concern about inventory levels in fiscal 2007, the agency said. Given the capital intensive nature of the high-rise segment, cash flow could take a dive in fiscal 2007, Moody's said.

Toll's ratings are supported by its ability to generate positive earnings even after large impairment charges, the agency said.

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