Fitch lowers Hovnanian

Fitch Ratings said it downgraded Hovnanian Enterprises, Inc.’s issuer default rating to CCC.

The downgrades reflect the company’s high debt load and leverage and an expectation that the company’s liquidity position will weaken in the near- to intermediate-term due to upcoming debt maturities, the agency said.

Fitch said it previously expected the company to refinance debt maturing in 2016, but the company has been unable to access the capital markets.

As of Oct. 31, the company had $245.4 million of unrestricted cash and $2.1 million of borrowing availability under its $75 million revolver that matures in 2018. HOV has $172.8 million of senior notes maturing in January 2016, $86.5 million coming due in May 2016 and $121 million maturing in January 2017, the agency said.

The company currently has sufficient cash to repay the $172.8 million of senior notes due in January, Fitch said.

But the company’s overall liquidity will be meaningfully exhausted following this debt repayment unless it is able to access the capital markets, generate meaningful free cash flow during the first half of fiscal 2016 or is able to successfully tap alternative liquidity sources, the agency said.

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