JELD - Homebuilder bonds' risk/reward tilt negative heading to 2021 JPMorgan says

JPMorgan credit research analyst Arjun Chandar underweights housing heading into 2021, saying "we simply believe that credit spreads have tightened to levels that create a negative risk/reward skew heading into 2021."Favors building materials over similarly rated homebuilders and CCC credits to BBs.Conservatively levered balance sheets in a cyclical industry suggests that "companies could start revisiting capital allocation decisions as they evaluate ways in which to capture growth from burgeoning demand," Chandar writes."Rates are low, but have been creeping higher and are expected to continue doing so in 2021."Still sees supportive market fundamentals in the short- to medium-term as tight inventory drive pricing and higher margins.Sees three largest homebuilders at valuations that negatively skew risk/reward.Downgrades D.R. Horton ([[DHI]] -0.3%) to Underweight from Neutral and Lennar ([[LEN]] -0.1%) and PulteGroup ([[PHM]] -0.7%) to Underweight from Overweight.Cuts Meritage Homes ([[MTH]] -2.2%) to Neutral from Overweight.Upgrades M.D.C. Holdings ([[MDC]] -1.2%) and Toll Brothers ([[TOL]]

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Homebuilder bonds' risk/reward tilt negative heading to 2021, JPMorgan says