S&P cuts William Lyon

Standard & Poor's said it lowered its corporate credit and senior unsecured debt ratings on William Lyon Homes.

The outlook remains negative.

"The downgrades reflect the likelihood that conditions will remain very challenging in 2008, which will weigh on this privately held homebuilder's already weak liquidity position and interest coverage," said S&P credit analyst George Skoufis.

"The company's investments in community growth have resulted in elevated debt and inventory levels and tough operating conditions in 2008 will make it difficult to liquidate inventory, which we believe will weigh on the company's financial profile."

The agency said it expects market conditions to remain challenging, which will negatively affect the company's more concentrated platform, noting that it would lower the ratings further if continued weakness in key housing markets further constrains liquidity.

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