The issuer default rating and senior unsecured note rating of Hovnanian Enterprises Inc., a homebuilder based in Red Bank, N.J., have been downgraded from BB-minus to B-minus/RR4 by Fitch Ratings. In addition, the homebuilder has been placed on Rating Watch Negative. Fitch said the downgrades reflect the U.S. housing environment, expected trends in Hovnanian's operating margins, and deterioration in its credit metrics. The rating watch placement reflects the company's "exposure to liquidity risk given ongoing negotiations with its bank group regarding modifications to its revolving credit agreement," Fitch said. In addition to the other downgrades, Hovnanian's senior subordinated notes were downgraded from B to CCC/RR6, and its preferred stock was downgraded from B-minus to CCC-minus/RR6. (The Recovery Ratings indicate the recovery prospects for holders of securities.) The rating agency can be found online at http://www.fitchratings.com.

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