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Moody's lowers M/I Homes
Moody's Investors Service said it lowered M/I Homes, Inc.'s corporate family and probability-of-default ratings to B1 from Ba3, senior unsecured debt ratings to B1 (LGD4, 51%) from Ba3 (LGD4, 56%) and preferred stock rating to B3 (LGD6, 94%) from B2 (LGD6, 94%).
The outlook remains negative.
According to the agency, the downgrade was prompted by the following: expectations that pre-impairment operating earnings will be negative in 2008; the possibility that the company may have to seek further covenant relief from its bank group in 2008; and its large exposure to particularly weak markets that may inhibit inventory reduction.
The negative outlook reflects the prospects for the homebuilding market in 2008 and the issuer's proportion of revenue and operating income from markets in Florida and the Midwest, which are continuing to undergo a considerable correction, Moody's said.
Ratings acknowledge the company's historically conservative and disciplined growth strategy and moderate debt leverage, the agency said.
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