Homebuilder Credit Ratings Near Junk Status

New York, NY, August 22, 2007--Standard & Poor's Ratings Service lowered the credit ratings of four homebuilders due to the nation's slumping housing market.

S&P cut the corporate credit and senior unsecured ratings on Pulte Homes Inc. to "BBB-" from "BBB" with a negative outlook. The rating is a half step away from junk bond status.

"The downgrades follow a second consecutive quarterly pretax loss, and reflect the continued weakening of the nation's housing markets," said credit analyst James Fielding in a statement.

S&P added that the recently volatile debt markets and more stringent mortgage credit standards have lowered demand for new homes and have "delayed our expectation for a recovery" in the housing market.

Debt markets have become increasingly erratic as investors have become more worried about the value of mortgages amid rising delinquencies and defaults, especially among subprime mortgages.

S&P also lowered its corporate credit, senior unsecured debt and preferred stock ratings on M/I Homes Inc. The ratings service lowered the corporate credit and senior unsecured ratings to "BB-" from "BB" and lowered the preferred stock rating to "B-" from "B." All of those ratings are non-investment grade. The outlook is negative.

"The rating actions reflect continued weakness in the company's Midwest and Florida housing markets where M/I's operations are concentrated, which is putting greater stress on profitability and interest coverage beyond previous expectations and will weigh on the company's performance over an extended period of time," said credit analyst Tom Taillon in a statement.

The short-term credit rating on Centex Corp. also dropped to "A-3" from "A-2". The new rating means adverse economic conditions are likely to weaken the company's ability to meet its obligations.

But S&P also affirmed Centex's "BBB", or investment grade, corporate credit and senior unsecured ratings.

S&P said if demand for Centex's homes drops more, it will lower its ratings further.

The ratings service also lowered its short-term corporate credit rating on Lennar Corp. from "A-3" to "A-2."

S&P affirmed the company's "BBB" long-term corporate credit and senior unsecured ratings.

The outlook is negative for both Centex and Lennar.