S&P Global Ratings downgraded 's corporatecredit rating to CCC+ from B-.
The rating agency also downgraded its issue-level ratings onthe company's 7.25% first-lien senior secured notes due 2020 to CCC+ from B-;5% and 2% first-lien senior secured notes due 2021 to CCC from CCC+; and 9.125%second-lien senior secured notes due 2020 and senior unsecured notes due2016-2019 to CCC- from CCC. It retained its C rating on Hovnanian's preferredstock as the company is restricted from paying a dividend by covenants on thepublic bonds.
The outlook is negative.
Given Hovnanian's capital constraints, "very high"debt load and "very weak" interest coverage, S&P said itconsiders the company's capital structure "unsustainable," resultingin the ratings downgrade.
The rating agency attributed the negative outlook to thepossibility of a downgrade in the next 12 months if it appears Hovnanian willface delays or difficulty with raising capital through land banking deals,joint ventures or other arrangements to meet its debt maturities.
S&P Global Ratingsand S&P Global Market Intelligence are owned by S&P Global Inc.