S&P raises MDC Holdings to investment grade

Standard & Poor's upgraded MDC Holdings Inc. to investment grade including raising its senior debt to BBB- from BB+. The outlook is stable.

S&P said the upgrade acknowledges the company's very strong and comparatively transparent financial profile, as well as its successful efforts to diversify homebuilding operations beyond its longstanding core markets.

Management has been growing into new markets organically, rather than through large acquisitions of existing homebuilders, resulting in a steady increase in deliveries from new markets and very manageable capital needs, S&P added. This measured approach to expansion has allowed the company to preserve its solid financial profile, which is characterized by strong cash flow protection measures and returns and modest leverage levels.

MDC's liquidity position is solid, supported by low leverage, good cash flow generation, and a modestly used credit facility, S&P noted. Common dividend payout levels are low (around 5% of earnings). Current backlog levels have largely been financed via permanent capital.

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