S&P Global Ratings upgraded its corporate credit rating on William Lyon Homes to B from B- with a stable outlook.

The rating agency also upgraded the issue-level rating on the company's senior unsecured debt to B+ from B-.

S&P upgraded the company as it expects William Lyon's leverage to improve to under 5x by the end of 2017, on the back of an increased backlog conversion rate and better margins in the third and fourth quarters.

Meanwhile, the stable outlook reflects the rating agency's expectation that William Lyon Homes will decrease its debt leverage below 5x through an increased number of closings and steady margin improvement in 2017, while increasing its free operating cash flow to debt ratio to 15% by the end of 2018.

S&P Global Ratings and S&P Global Market Intelligence are owned by S&P Global Inc.