Text-s&p: hovnanian ratings remain on watch positive

(The following statement was released by the rating agency) Oct 4 - Standard & Poor's Ratings Services today said that its ratings,including the 'CCC-' corporate credit

rating, on Hovnanian Enterprises Inc. remain on CreditWatch with positive implications. We placed the ratingson Credit Watch with positive implications on Sept. 19, 2012, after the

companyannounced that it would issue new senior secured notes and senior exchangeablenotes to refinance existing senior secured notes. We expect to resolve theCreditWatch listing upon the

full redemption of the 2016 notes, which we expectto occur on Nov. 1, 2012. Hovnanian recently completed the sale of $577 million of 7.25% first-liensenior secured notes due 2020, $220

million of second-lien senior securednotes due 2020, and $100 million of 6% senior exchangeable notes due 2017. Asof Oct. 2, 2012, the company has redeemed $637.2 million (79.95%) of

the10.625% senior secured notes due 2016 that were tendered as of Oct. 1, 2012(early tender deadline), and issued a notice of redemption to holders of theremaining $159.8 million notes to

redeem the notes on Nov. 1. This transaction significantly lengthens the company's debt tenor byaddressing the bulk of its 2016 debt maturity wall. Hovnanian's 2016refinancing

exposure declines to $218 million from slightly more than $1billion, while the company's interest burden is reduced by $17 million. Webelieve extending this significant maturity and

reducing the interest burdenwill help preserve cash and provide additional running room to improveoperations/profitability as housing slowly recovers and the company continuesto take steps

to reduce its significant overall debt burden. CreditWatch We intend to resolve the CreditWatch listing upon the completion of theredemption of the remaining outstanding 10.625% senior

secured notes due 2016.At that time, we expect to raise our corporate credit rating on the companytwo notches to 'CCC+' from 'CCC-'. We would also expect to raise our

rating onthe builder's existing senior secured notes due 2021 to 'CCC' from 'CC' andsenior unsecured notes due 2014-2017 to 'CCC-' from 'CC'.

RELATED CRITERIA AND RESEARCH -- Industry Economic And Ratings Outlook: U.S. Home Buyers Return, ButCan Builders Deliver? July 20, 2012 -- Issuer Ranking: U.S. Homebuilders, Strongest To

Weakest, July 23, 2012 -- Key Credit Factors: Global Criteria For Single-Family Homebuilders,Sept. 27, 2011 -- Use Of CreditWatch And Outlooks, Sept. 14, 2009 RATINGS LISTHovnanian

Enterprises Inc.Corporate credit rating CCC-/Watch PosSenior unsecured CC/Watch PosRecovery Rating 6K. Hovnanian Enterprises Inc.Senior Secured due 2021 CC/Watch PosRecovery Rating 5Senior

Unsecured CC/Watch PosRecovery Rating 6First Lien Senior SecuredNotes due 2020 CCC+Recovery Rating 3Second Lien Senior SecuredNotes due 2020 CCC-Recovery Rating 6 Exchangeable Notes due 2017

CCC- Recovery Rating 6Hovnanian Enterprises Inc.Preferred Stock C Complete ratings information is available to subscribers of RatingsDirect onthe Global Credit Portal at . All ratings

referencedherein can be found on Standard & Poor's public Web site at. Use the Ratings search box located in the leftcolumn.(New York Ratings Team) ((e-mail:

[email protected]; Reuters Messaging:[email protected]; Tel:1-646-223-6330;))