Moody’s Says the Housing Slump Will Last Through 2009
I have been utterly amazed at the news that I have seen for the last week. Any optimistic outlook is being squeezed out of all serious public pronouncements. This is the first sign of recovery. You can’t get better until you admit where you are at. However, the market still needs to go through its doldrums (or depression stage, as in we need Prozac). From Yahoo.
Credit rating agency Moody's Investors Service said Monday it expects the housing-market slump to last at least until 2009, likely precipitating numerous ratings downgrades at publicly traded homebuilders.
"Our current thinking is that the downturn, currently two years in the making, will last until 2009, with any sector recovery likely to be sluggish for some time after that," said Joseph Snider, senior credit officer at Moody's.
The agency predicts an increase in the number of downgrades and changes in ratings outlooks over that period, after already cutting nearly all of the public builders in recent weeks.
"Many of these companies may see further downgrades, with multiple-notch downgrades possible for homebuilders," Moody's said.
Ratings are used by lenders to set the terms of credit. Lower ratings generally mean it is more expensive for a company to borrow money.
Moody's said it expects builders to violate the terms of existing credit agreements as conditions on the housing market remain poor. That will lead lenders to "tighten restrictions on credit facilities, either through taking collateral, reducing the size of the facility, or restricting borrowing base calculations," the agency said.