S&P ups Orleans; loan at B-

Standard & Poor's said it raised the corporate credit rating on Orleans Homebuilders Inc. to B- from D and assigned a B- issue-level rating to the company's $130 million secured term loan. S&P also assigned a 3 recovery rating on the loan, indicating the expectation for a meaningful (50%-70%) recovery in the event of a payment default.

The outlook is stable.

The ratings reflect the company's aggressive financial profile, marked by low interest coverage metrics, exposure to floating-rate debt and modest cash reserves projected as the company exits bankruptcy, S&P said.

The ratings consider the company's vulnerable business profile, given Orleans' uncertain ability to generate the necessary level of new home sales to reach profitability and, to a lesser extent, an unclear exit strategy for the new owners, the agency said.

The ratings are supported by the company's historically good market position in the metropolitan Philadelphia area and other northeast regions, the agency added.

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