Moody's affirms M/I Homes

Moody's Investors Service said it affirmed the ratings of M/I Homes, including its corporate family rating of Ba2 and the Ba2 rating on its senior unsecured notes.

The company's outlook was revised to negative from stable, the agency said, noting that the negative outlook reflects Moody's expectation that M/I Homes' earnings in 2007 will decline significantly from 2006 levels, that complying with its interest coverage covenant may become problematic and that management's ability to build liquidity and reduce debt leverage in the face of a downturn of unknown breadth and duration is as yet unproven.

The ratings incorporate the company's newly-heavy dependence on profits from Florida markets, uneven profitability in other markets although substantial progress has been made in recent years, essentially flat unit home deliveries for the last six years and the cyclical nature of the homebuilding industry, Moody's added.

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