Moody's Cuts Toll Brothers To Junk On Dire US Housing Outlook

There is a lot of junk out there in the US financials. It is just in various stages of being marked to an accurate market rating. The dominos are falling. Alt-A debt will be the next to go, then credit cards, then the corporate bonds, and the Fed will make its stand on the US bond and the dollar, at a much lower level than today.

And then one way or another a bottom will be made, and we will gather ourselves together and go forward.

The degree to which the system is reformed and justice is administered will be a measure of this generation's character and commitment to our children.

AP
Moody's cuts Toll Brothers rating to junk status
Thursday July 3, 11:56 am ET
Moody's downgrades senior unsecured rating of Toll Brothers to junk status

NEW YORK (AP) -- Moody's Investors Service on Thursday cut the senior unsecured rating of homebuilder Toll Brothers Inc. to junk status, as homebuilding trends continue to weaken.

Moody's downgraded the Horsham, Pa.-based company's senior unsecured rating to "Ba1" from "Baa3." A rating of "Ba1" is one notch below investment grade. At the same time, Moody's confirmed the company's "Ba2" subordinated debt rating and assigned a corporate family rating of "Ba1."

"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," the ratings service said.

While the company's tower business in the Northeast has been relatively strong up until now, Moody's expects this business to weaken, as condominium inventory levels have escalated in recent months.

A Stable outlook reflects Moody's expectations that Toll Brothers will continue to build cash balances and will be fiscally disciplined during the downturn.

The ratings or outlook could benefit if the company were to demonstrate significant inventory reduction or continue generating positive earnings before impairments, Moody's said.