Moody’s cuts Builders FirstSource to Ba2 on housing slump and rising leverage

Moody's Ratings downgraded Builders FirstSource Inc.'s corporate family rating to Ba2 from Ba1 and revised its outlook to negative due to severe margin compression and surging leverage in the U.S. residential construction market. The rating agency expects elevated mortgage rates, poor housing affordability, and industry-wide capacity overhang to delay earnings recovery, with debt-to-EBITDA rising to 5.0x. While the company has solid liquidity, further downgrades could occur if debt-to-EBITDA remains above 3.5x.