Bad News for Standard Pacific Homebuilders
Some bad news for one of the larger homebuilders in the United States.
Fitch Ratings assigned a “junk” rating to homebuilder Standard Pacific Corp.’s proposed $100 million convertible debt offering.
The ratings agency assigned a “B” rating, which means the debt is speculative and subject to very high credit risk. The non-investment grade rating also means Standard Pacific will have less favorable borrowing terms than if the debt received an investment grade rating.
Fitch also noted its “Negative” outlook for the company, due to “a more challenging outlook for homebuilders during the balance of calendar 2007 … and probable future weakening in the housing market in 2008.”
In aftermarket trading shares of Standard Pacific shares fell 1 cent to $7.04, after falling $1.05, or 13 percent, during Monday’s trading session.
As homebuilders, lenders, and banks find themselves increasingly unable to get loans it seems likely that many of the major players in the lending industry will remain unable to get out of debt.
One thing is clear, investors consider companies involved in home building and lending to be risky investments.
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