Fitch Upgrades Centex Ratings In Line With Pulte's

NEW YORK (AP) — Fitch Ratings upgraded homebuilder Centex Corp.'s debt rating one notch on Monday to match ratings of Pulte Homes Inc., which completed the $1.53 billion all-stock acquisition of its rival this month.

Fitch raised Centex's issuer default and senior unsecured ratings to "BB+" (one notch into junk status) from "BB" and assigned "positive" outlooks. The agency withdrew short-term default and commercial paper ratings of "B," with a "negative" outlook.

The ratings on Pulte's issuer default, senior unsecured and unsecured bank credit facility were maintained at "BB+."

Bloomfield Hills, Mich.-based Pulte assumed Centex's unsecured notes, which Fitch said would benefit from the guarantees of Pulte's operating subsidiaries. Pulte's debt increased moderately due to the deal, but the combined company has strong liquidity, a bigger presence in top markets, and the chance to cut costs, Fitch said.

The ratings agency said Pulte will probably reduce debt by year-end because of a recently announced tender offer for $1.5 billion of debt and the repayment of $211 million of senior notes maturing in September, although it warned that the paying down of debt could be offset by an erosion of shareholder equity from potentially "significant" write-downs of assets.

Fitch said it expects the housing market to remain challenging the rest of the year.

Pulte shares fell 5 cents to close at $12.62.