Toll Brothers Inc., the largest U.S. luxury homebuilder, had its credit rating cut to junk by Moody's Investors Service as weak demand deepens the housing recession.
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(Bloomberg) -- The rating on the Horsham, Pennsylvania-based company's senior unsecured notes was reduced to Ba1 from Baa3, Moody's said today in a statement. The cut affects $1.1 billion of debt, Joseph Snider, a senior credit officer at Moody's in New York, said in an interview. "While the company is one of the only remaining homebuilders that is currently generating earnings before impairment charges, Moody's does not expect this to continue, as falling prices and lower absorption rates continue to impact margins,'' Moody's said in the statement. Toll Brothers reported its third straight quarterly loss on June 3 as tumbling demand forced the company to write down land values. The net loss for the fiscal second quarter ended April 30 was $93.7 million. The five largest U.S. builders have reported a combined $3.3 billion in losses in their most recent quarters, hurt by what Chief Executive Officer Robert Toll described last month as a "downward spiral'' of home prices.
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