Moody's Downgrades Beazer, Hovnanian

New York, NY, March , 2009--Moody's Investors Service on Friday cut its ratings on homebuilders Beazer Homes  and Hovnanian Enterprises, citing concerns that home sales will continue to weaken in 2009 and 2010.

Moody's cut debt ratings of Beazer Homes, warning that the homebuilder's risk of defaulting on its debt has risen as the company's cash flow outlook worsens.

Moody's downgraded Beazer Homes' corporate family debt rating to "Caa2," down three notches from "B2." Both ratings indicate "junk"; a 'Caa2' rating is eight notches below investment grade.

Moody's said it expects Beazer Homes' cash flow performance "will weaken considerably in 2009 and be followed by an even weaker 2010. The easy part of cash flow generation is now largely behind the company."

Hovnanian is likely to turn cash flow negative this year after excluding tax loss refunds, Moody's said.