Fitch: Homebuilder Bond Prices Outpace Ratings

Prices on U.S. homebuilder bonds are trading at or near their pre-crisis levels, but ratings continue to struggle, according to a new report from ""Fitch Ratings"":http://www.fitchratings.com/web/en/dynamic/fitch-home.jsp.

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While some issuers may be able to regain their pre-crisis ratings, Fitch believes ""others may have more of an uphill battle"" as they work to grow their businesses, increase profitability, and improve credit metrics.

At the same time, bond issuers will have to demonstrate that they can sustain any improvement in credit metrics and still remain disciplined in their land strategies to see any ratings upgrades.

""The environment that prevailed during the last upcycle was not typical and we believe it may be difficult to replicate that kind of very robust environment, which ultimately drove homebuilder ratings,"" Fitch said in a release. ""Conversely, the nature of the down (depth and length) was unique and unlikely to be duplicated.

""We think it would be very difficult to gauge a time parameter in terms of if and when homebuilders can or will return to pre-crisis ratings, as specific variables are anything but certain. The operating environment would weigh heavily as well as individual strategies and their capacity to withstand another downturn.""