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Homex Bonds Extend Losses After Moody’s Outlook Cut to Negative

Desarrolladora Homex SAB (HOMEX*) bond yields rose, extending their biggest weekly increase on record, after Moody’s Investors Service lowered the outlook for its credit rating on Mexico’s biggest homebuilder.

The yield on the company’s 2020 bonds rose 93 basis points, or 0.93 percentage point, to a record 15.13 percent, as the price fell 3.42 cents to 77.25 cents on the dollar, according to data compiled by Bloomberg. The bond’s yield has soared 466 basis points over the past week.

Moody’s cut the outlook on Homex’s rating to negative from stable, signaling an increased likelihood of a downgrade, according to a statement yesterday after markets closed. The Culiacan-based company currently is rated Ba3, three levels below investment grade.

“The negative rating outlook reflects our expectation that Homex sales and earnings will be challenged at least through the end of 2013,” Moody’s said in the statement.

Investors this year have punished securities of the country’s homebuilders amid disappointing earnings, negative cash flow reports and changes in government housing policy to promote more capital-intensive apartment construction.

Homex shares fell 2.8 percent to 19.11 pesos at the close of trading in Mexico City, extending their losing streak to 10 days. Corp. Geo SAB rose 2.3 percent to 7.04 pesos today, while Urbi Desarrollos Urbanos SAB (URBI*) added 2.7 percent to 3.08 pesos.

Moody’s cut Urbi’s credit rating one level yesterday to B2, four levels below investment grade, under review for possible downgrades. The company also cut Corp. Geo’s credit rating outlook to negative from stable.

To contact the reporters on this story: Veronica Navarro Espinosa in New York at vespinosa@bloomberg.net; Danielle Verbrigghe in New York at dverbrigghe@bloomberg.net

To contact the editor responsible for this story: David Papadopoulos at papadopoulos@bloomberg.net

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