S&P: Ryland convertibles BB-

Standard & Poor's said it assigned a BB- rating and 4 recovery rating to the Ryland Group Inc.'s proposed $150 million convertible senior notes due 2018.

The company could upsize the offering to $172.5 million at the underwriter's option. The 4 recovery rating indicates 30% to 50% expected recovery in a default.

The notes will be guaranteed, jointly and severally, by substantially all of Ryland's direct and indirect wholly-owned homebuilding subsidiaries.

Ryland's newly issued notes will rank equally with its $824 million of existing senior unsecured notes.

The proceeds will be used for general corporate purchases.

The company's next debt maturity is in June 2013 when $167 million 6.9% senior notes mature.

The agency said it believes the company will ultimately use the additional liquidity raised through this offering to repay its 2013 debt maturity.

The ratings reflect the company's aggressive financial risk profile, S&P said.

But, community count growth should help volume growth, the agency said, and Ryland could achieve modest profitability in 2012.

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