S&P: Orleans view to negative

Standard & Poor's said it revised the outlook on Orleans Homebuilders Inc. to negative from stable.

The agency also said it affirmed the B- corporate credit rating and B- rating on the company's $130 million secured term loan.

S&P also said it maintained the 3 recovery rating on the loan, indicating 50% to 70% expected recovery in a default.

The outlook revision reflects erosion of the cushion under the tangible net-worth covenant required by the company's credit agreement, the agency said.

The negative outlook also considers a belief that Orleans' already slim covenant headroom will continue to narrow over the coming quarters as net losses erode tangible net worth, S&P said.

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