S&P lifts ratings outlook on Lennar to 'positive'

Standard & Poor's raises ratings outlook on Lennar, expects better revenue ahead for builder

Associated Press

NEW YORK (AP) -- Standard & Poor's Ratings Services revised its rating outlook for Lennar Corp. on Tuesday, saying it expects that the homebuilder's revenue and earnings growth will improve over the next 12 to 18 months.

That scenario could materially bolster the company's credit profile, the ratings firm said.

S&P raised its outlook for the Miami builder to "Positive" from "Stable." The change implies that S&P may raise Lennar's rating over the next six months to two years.

S&P credit analyst Susan Madison noted that Lennar's access to cash has been helped by the addition of $410 million via a credit line. In addition, the recent partial reversal of the company's deferred tax asset allowance should help boost the ratings firm's expectation that Lennar is likely to post net operating profits over the next two years, Madison added.

The ratings firm has a "B+" corporate credit rating assigned to Lennar and its debt. That is non-investment or junk grade. It has a recovery rating on the builder's unsecured senior notes that estimates the average recovery to bondholders should Lennar default on the notes at between 30 and 50 percent.

S&P assigned the same recovery rating to Lennar's proposed $300 million of senior notes due 2017.

Lennar shares closed down 24 cents at $31.15.

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