S&P cuts Arias to B-

Standard & Poor's said it lowered its counterparty credit rating on Arias Acquisitions Inc. to B- from B and placed it on CreditWatch with negative implications.

This action is in response to Arias's fourth-quarter 2006 results, which were well below expectations and raise a material concern that Arias will fall out of compliance with the financial covenants on its outstanding debt within the next 90 days, the agency said.

The downgrade reflects S&P's belief that the weakness of the new housing market will continue to adversely affect revenues, operating performance and cash-flow generation over the next several quarters. Although Arias is expected to be a generator of cash flow, S&P said, the downgrade reflects the more precarious balance between operating cash-flow generation and outstanding debt.

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