S&P Downgrades Homebuilder's Bonds to "Junk" Status

Standard & Poors downgraded the bonds of D.R. Holton and Pulte Homes to junk bond status. Both companies trade on the New York Stock Exchange, under the symbols DHI and PHM, respectively.

From the Rueters Article:

NEW YORK, Nov 2 (Reuters) - Standard & Poor's on Friday cuts its ratings on D.R. Horton Inc (DHI.N) and Pulte Homes Inc (PHM.N) into junk territory, citing the vulnerability of the home builders to the deteriorating housing market and macroeconomic conditions.

Both builders were cut one notch to "BB-plus," one level below investment grade, from "BBB-minus." The outlook for both companies is negative, indicating an additional cut is likely over the next two years.
www.reuters.com/article/marketsNews/idUKWNA210520071102?rpc=44

Bonds rated less than "BBB" minus are considered "junk", or below investment grade. The ratings scheme is set out below:

AAA and AA: High credit-quality investment grade
AA and BBB: Medium credit-quality investment grade
BB, B, CCC, CC, C: Low credit-quality (non-investment grade), or "junk bonds"
D: Bonds in default for non-payment of principal and/or interest

This lowering of bond ratings is just one more result of the subprime mortgage meltdown and the attendent declines in the housing and construction market.

WEALTH KIND OF MELTS WHEN THE MARKET READJUSTS IN THE DESERT OF THE REAL!