Moody's cuts Ryland

Moody's Investors Service said it lowered Ryland Group, Inc.'s corporate family and probability-of-default ratings to Ba2 from Ba1, and senior unsecured notes to Ba2 (LGD4, 58%) from Ba1 (LGD4, 60%). The agency also assigned a speculative grade liquidity rating of SGL-3.

The outlook remains negative.

The downgrades consider that the company has begun to generate quarterly losses before impairments, according to Moody's.

The company also faces a challenging covenant compliance environment, reflecting the continuing erosion of its net worth from impairments and other charges, which deplete the relatively narrow cushions in its minimum tangible net worth and debt leverage covenants, the agency added.

Ratings are supported by its consistently positive cash flow generation, reasonably strong inventory performance and minimal off-balance sheet risk, Moody's said.

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