Fitch drops Meritage

Fitch Ratings said it downgraded Meritage Homes Corp.'s ratings as follows: issuer default rating to BB- from BB, senior unsecured to BB- from BB, unsecured bank credit facility to BB- from BB and senior subordinated debt to B from B+.

Fitch said it has also revised Meritage's outlook to negative from stable.

The downgrade reflects the current difficult U.S. housing environment, negative trends in Meritage's operating margins and deterioration in credit metrics, especially interest coverage and debt/EBITDA ratios, the agency said, adding that Meritage was slower than most in braking its growth and consequently inventories remain above comfort levels.

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