S&P rates Stearns notes B+

Standard & Poor's said it assigned its B+ issuer credit rating to Stearns Holdings Inc.

The outlook is stable.

The agency also assigned a B+ issue-level rating to Stearns' proposed issuance of $200 million senior secured notes.

S&P said it views the company's geographic and business concentrations as negative rating factors. The residential real estate market depends highly on interest rates and the underlying health of the economy.

For instance, low interest rates resulted in large mortgage refinancing volumes in 2012 - 69% of Stearns' $11.8 billion origination volume came from refinancing - and a spike in rates could significantly reduce the company's activity. In addition, California made up 54% of the company's originations, exposing the company to a potential regional slowdown, the agency said.

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