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Homebuilders Shrug Off Downgrade

Centex, Lennar and Pulte overcome the action by Moody's.






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Pulte Homes

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held their ground Thursday despite a downgrade from Moody's.

Moody's lowered its rating on senior unsecured notes issued by Centex and Lennar to Ba1 from Baa2 and cut each of their commercial paper ratings to not prime from prime-2. Pulte's senior unsecured rating was dropped to Ba1 from Baa3 previously.

The companies were each assigned corporate family ratings of Ba1. All three were also given negative ratings outlooks and were taken off review for downgrade, where they had been placed Aug. 22.

The downgrade came about because Moody's said it doesn't see a housing sector recovery beginning before 2009 at the earliest, "with any recovery likely to be very measured at first, thus prolonging the companies' underperformance on key financial metrics vs. prior expectations."

Still, shares of all three held firm. Centex gained 0.3% to $29.43, and Lennar was down only 0.1% to $25.29. Pulte was higher by 1.2% at $15.54.

The downgrade affected $9.4 billion of debt securities and $3.25 billion of commercial paper authorizations.