S&P ups William Lyon Homes

Standard & Poor's said it raised its corporate credit rating on William Lyon Homes to B+ from B and raised the company's senior notes to B from B-.

The outlook remains positive.

"The rating actions reflect the company's good position within its markets and improved balance sheet and liquidity, which have contributed to improved flexibility and reduced reliance on joint ventures," said S&P credit analyst George Skoufis. "Profitability has improved and should continue to benefit from some higher margin projects now being pursued on its balance sheet. Secured debt levels and leverage have moderated, but remain somewhat higher the company's peers. These improvements are modestly countered by geographic concentration, and a somewhat complex, but improving, financial profile."

S&P said a sizeable, growing backlog of ordered homes should provide predictable revenues in the near term, while recently improved flexibility should allow management to enhance the company's competitive position within its primary markets. Longer-term, an upgrade would be warranted if management continues to improve its leverage profile, grow profitably on-balance sheet, and smooth out somewhat uneven quarterly inventory turns and coverage measures.

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