S&P lowers Weekley Homes view to negative

S&P said it revised the outlook on Weekley Homes LLC to negative from stable and affirmed the B+ corporate credit rating.

The agency also said it affirmed the B+ rating on the company's senior unsecured notes due 2023.

The recovery rating of 3 is unchanged, indicating 50% to 70% expected default recovery.

The negative outlook reflects an expectation that leverage will be temporarily high for the current rating at nearly 6x at year-end 2016, S&P said.

The forecast for home closing growth and stabilizing gross margins in 2017 is expected to be sufficient to drive leverage back down to 5x, the agency added.

But, the negative outlook also considers some downside risk to the forecast if the company's Houston exposure continues to negatively affect performance and gross margins continue to deteriorate, S&P said.

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