by Calculated Risk on 10/31/2007 12:59:00 PM

From Reuters: Moody's may cut D.R. Horton, Ryland, into junk

Moody's ... said it may cut its ratings on D.R. Horton Inc and Ryland Group Inc into junk territory ...

The builders have struggled to generate free cash flow, "in part because of their limited success to date in reducing actual inventory, in part because of continuing high cancellation rates, and in part because of the fiercely competitive environment the two companies face in most of their markets," Moody's said in a statement.

"Exacerbating the situation, especially in the case of Horton, is the elevated level of (speculative) inventory," Moody's said.