Fitch cuts Tousa

Fitch Ratings said it downgraded Tousa, Inc. and put its ratings on Rating Watch negative.

The agency downgraded the issuer default rating to CC from CCC, secured revolving credit facility to CCC/RR2 from B-, first-lien secured term loan to CCC/RR2 from B-, second-lien secured term loan to C/RR5 from CCC-, senior unsecured notes to C/RR6 from CC, senior subordinated notes to C/RR6 from CC and preferred stock to C/RR6 from CC.

The company said that in response to deteriorating market conditions in the third quarter, it is exercising its right to abandon a number of land option contracts. As a result, Tousa expects to incur significant charges in the third quarter, according to the agency.

The downgrade of the issuer default rating reflects challenging housing conditions in most of the company's markets and Fitch's expectation that a turnaround in the near term is unlikely, Fitch said.

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