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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: robbie_nw who wrote (81210)	4/27/2007 9:47:41 AM
From: redfrecknj	Respond to of 110194

Direct from Moodys [Moody's Investors Service affirmed the Baa3 senior unsecured rating of Pulte Homes, Inc. ("Pulte") and revised the company's ratings outlook to negative from stable.] Rating Action: Pulte Homes, Inc. Moody's affirms Pulte's ratings; revises outlook to negative Approximately $3.55 billion of debt securities affected New York, April 26, 2007 -- Moody's Investors Service affirmed the Baa3 senior unsecured rating of Pulte Homes, Inc. ("Pulte") and revised the company's ratings outlook to negative from stable. The negative ratings outlook reflects Moody's concerns over the company's increasingly weak operating performance, its inability to turn cash flow positive at this point in the cycle, and the expectation that compliance with its current interest coverage covenant may become problematic in the latter part of 2007. The affirmation of Pulte's senior unsecured rating considers the company's long history of consistent, steady performance through past down cycles, its conservative, stable approach to new business opportunities, its robust market position, and its widespread geographic, product and price point diversity. At the same time, Moody's remains concerned that Pulte, like the other homebuilders, may face institutional pressure to apply cash flow or asset sale proceeds to major share repurchases, especially as it begins to generate positive cash flow. The ratings also acknowledge that Pulte maintains a lot supply that is one of the longest in the industry, and that additional impairment charges in 2007 are likely. Going forward, Pulte's outlook and ratings could stabilize if: i) the company were to generate strongly positive cash flow in 2007 and use the cash to pay down debt, and ii) if Moody's were to expect key financial metrics, especially interest coverage, gross margins, and return on assets, to return to levels consistent with Pulte's Baa3 rating within a two-year time horizon. The ratings could be lowered if: i) Pulte were to use free cash flow to repurchase a measurable amount of shares; ii) the company were to continue generating negative cash flow on an LTM basis; iii) Pulte were to generate modest quarterly pre-impairment losses on a sustained basis or significant pre-impairment losses in any one quarter; or iv) Moody's were to anticipate that underperformance on the key financial metrics will persist beyond the two-year time horizon. Headquartered in Bloomfield Hills, Michigan, Pulte Homes, Inc. is one of the country's largest homebuilders, with domestic operations in 27 states and 52 markets, as well as in Puerto Rico. Revenues and net income in 2006 were $14.3 billion and $687.5 million, respectively. New York Tom Marshella Managing Director Corporate Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653 New York Joseph A. Snider VP - Senior Credit Officer Corporate Finance Group Moody's Investors Service JOURNALISTS: 212-553-0376 SUBSCRIBERS: 212-553-1653