S&P lowers Hovnanian

Standard & Poor's said it lowered the corporate credit rating on Hovnanian Enterprises Inc. to SD (selective default) from CC.

The agency also said it lowered the ratings on the group's senior unsecured notes to D from C. The recovery rating remains unchanged at 6, indicating 0% to 10% expected recovery in a default.

The agency also said it assigned a CC rating to the company's new $141.8 million 5% senior secured notes due 2021 and $53.2 million 2% senior secured notes due 2021.

A recovery rating of 5 was assigned to these issues, indicating 10% to 30% expected recovery in a default.

The company issued these new notes in exchange for a portion of its outstanding senior unsecured notes.

The actions follow news that the company completed its debt exchange offer, S&P said.

The company exchanged $195 million of its seven series of senior unsecured notes for $195 million of new senior secured notes, which comprise $141.8 million 5% senior secured notes due 2021 and $53.2 million 2% senior secured notes due 2021.

The tender offer is viewed as distressed and tantamount to a default given the company's stressed and highly leveraged financial risk profile, the agency said.

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