Moody's drops Stanley-Martin

Moody's Investors Service said it lowered Stanley-Martin Communities, LLC's ratings, including its corporate family rating to B2 from B1 and its probability of default rating to B2 from B1.

The rating on the company's senior subordinated notes was confirmed at B3, the agency said.

The outlook is stable.

The downgrade was triggered by the company's continuing to build inventory and generate negative cash flow, by Moody's expectation that headroom under the company's interest coverage covenant will continue to narrow and by the company's failure to reduce its debt leverage in line with Moody's expectations.

The agency added that Stanley-Martin's ratings are constrained by the company's relatively small size and-scale as well as limited geographic reach and product diversity.

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