Moody's rates Toll Brothers notes Ba1

Moody's Investors Service said it assigned a Ba1 rating to $400 million senior unsecured notes issued by Toll Brothers Finance Corp., which are guaranteed by Toll Brothers, Inc.

Toll Brothers, Inc.'s corporate family and senior unsecured rating at Ba1, senior sub debt rating at Ba2, and speculative grade liquidity rating at SGL-1 were affirmed.

The outlook remains negative.

Proceeds will augment the company's already strong liquidity position, according to the agency. In addition, they will provide the company additional flexibility with regard to handling its two tranches of 2011 maturities.

Ratings are supported by Toll Brothers' leadership position in its upper end homebuilding niche; an ability to greatly restrict its land spend for relatively long periods of time and its currently strong liquidity profile, the agency said.

Ratings also incorporate expectation that consolidated cash flow from operations will be negative in 2009, that pre-impairment earnings will dip into the negative column, that continued impairment charges will lessen the substantial headroom that the company currently enjoys in its bank covenants, that the overall general economy and macro housing outlook will remain unsupportive into 2010 and that there could be additional capital drain from troubled joint ventures, Moody's said.

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