CORRECTED - Centex, DR Horton, Pulte may bust credit terms -S&P

(Corrects headline, first and third paragraphs to show that the companies are vulnerable to breaking covenants on credit facilities, not bonds)

By Al Yoon

NEW YORK, May 29 (Reuters) - At least three major U.S. home builders suffering from the housing slump may violate contracts that govern bank credit facilities, Standard & Poor's analysts said on Tuesday.

Centex Corp. (CTX.N) , D.R. Horton Inc. (DHI.N) and Pulte Homes Inc. (PHM.N) are three of six home builders whose debt rating outlooks were revised on Thursday to negative from stable by S&P.

The three are "all close" to breaking covenants, S&P analyst Jim Fielding said on a conference call.

Weak earnings at home builders during the prolonged housing downturn suggest that the interest coverage measures may weaken further for quarters to come, S&P said in its reviews last week. The analysts are using a base assumption that the U.S. housing slump will last for another year and a half, analyst Lisa Sarajian said on the conference call.

The home builders are mostly sapped by excess inventories as cooling home-price appreciation and tightening lending standards curbed sales, the analysts said.

"We're operating under the assumption that another shoe could drop (in the U.S. housing market) and become more severe," Fielding said.

Fielding, in a Reuters interview, said that home builders are already seeking waivers to covenants following rapid declines in their earnings before interest, taxes, depreciation and amortization. Creditors are usually flexible on covenants with the higher rated lenders, he said.

But one lower rated builder, Technical Olympic USA Inc. TOA.N, had to put up collateral against its debt as it revised its covenants several months ago, he said. S&P in April placed Technical Olympic's "B-" senior unsecured debt rating on review for downgrade.

Home builder bonds were thinly traded on Tuesday afternoon, according to MarketAxess.