Moody's rates Orleans Homebuilders Caa1, loan B3

Moody's Investors Service said it assigned Orleans Homebuilders, Inc. a Caa1 corporate family rating and Caa2 probability of default rating, and its $155 million first-lien senior secured bank credit facility, consisting of a $125 million term loan and $30 million revolver, a B3 (LGD2, 28%) rating.

The outlook is stable.

The ratings reflects Orleans' small size, thin equity cushion, brittle unrestricted cash position, net losses that are expected to persist for at least another two years, concentration in the upper end price range of the homebuilding industry and uncertain collateral value, as well as the shaky homebuilding and macroeconomic environment, Moody's said.

The ratings also consider what should be a manageable debt load with very modest amortization requirements, a long land position that should permit the company to harvest cash flow and a moderately leveraged capital structure, the agency said.

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