Six years after recovery from the Great Recession began, some of the largest homebuilders in the US are still facing challenges
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Six years after recovery from the Great Recession began, some of the largest homebuilders in the US are still facing challenges.
High leverage and a heavy debt burden are still weighing on some builders, according to a new report from Fitch Ratings.
These builders that entered the downturn with high levels of debt include Beazer Homes and Hovnanian Enterprises and Fitch says that they will be betting on the housing market’s continued recovery.
With a debt-to-capitalization ratio of above 100%, Hovnanian capital structure is untenable Fitch warns. The builder has $1.74 billion of debt and, despite refinancing debt due in 2018 and 2019, it has other debt due to mature. It will need a healthy housing market for several years not to default.
Beazer’s position is better with a debt/capitalization ratio of 68.1% and Fitch believes that its debt structure means that it may be able to catch up to its peers if the housing market remains healthy.
The report says that the homebuilding sector is generally good with most of the builders it covers showing improved credit metrics and balance sheets.
Fitch expects the housing recovery to continue through at least 2018 although rising land, labor and material costs will pressure profits.
High leverage and a heavy debt burden are still weighing on some builders, according to a new report from Fitch Ratings.
These builders that entered the downturn with high levels of debt include Beazer Homes and Hovnanian Enterprises and Fitch says that they will be betting on the housing market’s continued recovery.
With a debt-to-capitalization ratio of above 100%, Hovnanian capital structure is untenable Fitch warns. The builder has $1.74 billion of debt and, despite refinancing debt due in 2018 and 2019, it has other debt due to mature. It will need a healthy housing market for several years not to default.
Beazer’s position is better with a debt/capitalization ratio of 68.1% and Fitch believes that its debt structure means that it may be able to catch up to its peers if the housing market remains healthy.
The report says that the homebuilding sector is generally good with most of the builders it covers showing improved credit metrics and balance sheets.
Fitch expects the housing recovery to continue through at least 2018 although rising land, labor and material costs will pressure profits.
