Moody's may upgrade Ryland

Moody's Investors Service said it placed the senior implied rating of The Ryland Group Inc. under review for possible upgrade to Baa3 from Ba1.

At the same time, Moody's confirmed all of the company's other ratings, including its issuer rating and ratings on its senior notes at Ba1 and rating on its senior subordinated debt at Ba2.

The outlook was raised to positive from stable.

In its review, Moody's said it will focus on the company's commitment to maintaining an investment-grade profile, the sustainability of its improved financial and operating results, and its liquidity.

The review for upgrade was limited at this time to Ryland's senior implied rating because the company's bank credit facility is structurally senior to its publicly-rated senior notes and senior subordinated notes. The bank credit facility (which Moody's does not rate) carries the guarantees of Ryland's operating subsidiaries; the publicly-rated notes do not. Going forward, consideration for an upgrade of the company's publicly-rated notes will rest on elimination of their structural subordination to the bank debt.

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