Moody's lowers Tousa, rates loans B2, Caa2

Moody's Investors Service said it lowered Tousa, Inc.'s corporate family and probability-of-default ratings to Caa2 from B3, senior unsecured notes to Caa3 (LGD5, 72%) from Caa1 and senior subordinated debt to Ca (LGD6, 91%) from Caa2. The downgrades end the review that began March 21.

Moody's also rated the company's $200 million first-lien term loan at B2 (LGD2, 19%) and the $300 million second-lien term loan at Caa2 (LGD4, 52%).

The outlook is negative.

Proceeds will be used to pay par of $400 million to the senior lenders of the Transeastern joint venture.

The downgrades and negative outlook reflect the challenges of increased debt leverage in a difficult industry environment, with pro form debt leverage of 71% and negative cash flow in 2007, Moody's said. The company also has a long land supply of greater than seven years and significant exposure to the Florida market, the agency added.

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