S&P rates Ryland notes BB-

Standard & Poor's said it assigned a BB- rating with a recovery rating of 4 to $230 million of 8.4% senior unsecured notes due May 2017 that are guaranteed by substantially all of Ryland Group Inc.'s homebuilding subsidiaries.

The outlook is negative.

Ryland will use the proceeds for general corporate purchases. S&P said that in the interim, Ryland's leverage will rise and will likely be tight relative to its bank covenant.

However, given the company's cash positions, the agency believes it's possible that Ryland may continue to repurchase some of its debt, which should provide additional cushion under the leverage covenant.

The BB- corporate credit rating on Ryland reflects the company's adequate liquidity position and its greater diversification and lesser exposure to some of the overbuilt coastal and southwestern markets than many of its peers, the agency said.

Offsetting these positives is the diminished capacity under the company's revolving credit facility following a recent amendment, S&P said.

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