(Adds Moody's action on Hovnanian)
NEW YORK Jan 17 Moody's Investors Service on
Thursday cut its ratings on M/I Homes Inc (MHO.N) and Hovnanian
Enterprises Inc (HOV.N) deeper into junk territory, citing
expectations for further deterioration in the home builders'
balance sheets this year.
Hovnanian also remains on review for further downgrade.
M/I Homes is likely to post negative earnings in 2008 and
may again have to renegotiate terms of its debt with its bank
lenders, Moody's said in a statement.
The downgrade also reflects "the company's large exposure
to particularly weak markets that may inhibit the company's
actual inventory reduction capability going forward," the
rating agency said.
Moody's cut M/I Homes' corporate family rating and senior
unsecured debt one notch to "B1," four levels below investment
grade, from "Ba3." The outlook is negative, indicating an
additional downgrade may be likely over the next 12 to 18
Hovnanian's earnings are also likely to be negative in
fiscal 2009 before impairments and option abandonments are
made, Moody's said.
The builder has also tripped certain terms relating to
factors related to its debt, including its interest coverage,
and its review for further downgrade will depend on Hovnanian
being able to negotiate terms with its lenders, Moody's added.
Moody's cut Hovnanian's corporate family rating and senior
notes two notches to "B2," five levels below investment grade,
from "Ba3." The unsecured debt was cut three notches to "Caa2,"
eight levels below investment grade, from "B2."
(Reporting by Karen Brettell; Editing by Dan Grebler)