Irvine-based Standard Pacific Corp. saw its credit rating fall further into junk bond status Friday as Moody’s Corp. cut its ratings for the homebuilder.
Moody’s cut Standard’s overall debt rating to “Caa1” from “B2” and its unsecured debt rating to “Caa1” from “B2.”
The rating on the company’s senior subordinated debt was cut to “Caa3” from “Caa1.”
In Moody’s ratings, anything less than “Baa” is considered junk, or less than investment grade quality.
Standard Pacific also was assigned a “negative” outlook on its debt ratings.
Standard Pacific’s cash flow “will weaken considerably in 2009 and be followed by an even weaker 2010,” Moody’s said.
The homebuilder already has sold off land and quit speculative building but faces the prospect of more job cuts and absorption of debt from joint ventures that could fold, Moody’s said.
Last month, Standard Pacific said it was putting on hold acquisitions amid a bleak outlook for the housing industry.
This year “is definitely going to be worse than 2008, both in terms of volumes and prices,” said Ken Campbell, who took over as chief executive of the homebuilder in December.
Campbell, a turnaround specialist, joined Standard Pacific from the homebuilder’s dominant shareholder, New York-based MatlinPatterson Global Advisors LLC.
Last year MatlinPatterson became Standard Pacific’s largest shareholder in deal credited with saving the struggling homebuilder.
