Standard & Poor’s (S&P) has published a report on how the credit quality of US wood product companies may be affected by the decline in the American housebuilding market.
Three Scenarios for US Wood Products Companies in 2008 as Homebuilding Lags says demand and pricing for lumber and OSB will continue to be weak in the near-to-intermediate term, leading to uncertain credit quality for the companies.
The report says more than half of rated companies still had stable outlooks, with the rest having predominantly negative outlooks or S&P has placed ratings on them on CreditWatch for potential transformation plans.
S&P believes wood product manufacturers’ financial performance will continue to suffer from the residential construction slowdown for the next few quarters.
But it says further interest rate cuts by the US Federal Reserve could improve housing starts.
