Research Update: William Lyon Homes Inc. Outlook Revised To Negative On Weakening Credit Measures; 'B' Issuer Credit Rating Affirmed

Newport Beach, Calif.-based William Lyon Homes Inc.'s (WLH) credit metrics are weakening due to softer profits generated from key markets in the West Coast. We think our estimated 2020 EBITDA will be similar to 2019 levels, but that the impact on leverage will be limited by more moderate spending on land and development. For these reasons, we are revising our rating outlook on WLH to negative from stable and affirming our 'B' issuer credit rating on the company. We are also affirming our 'B+' issue-level rating on the company's senior unsecured debt. The negative outlook indicates the possibility that we will lower our rating on William Lyon over the next year if credit metrics weaken further, such that debt to

...- Newport Beach, Calif.-based William Lyon Homes Inc.'s (WLH) credit metrics are weakening due to softer profits generated from key markets in the West Coast. - We think our estimated 2020 EBITDA will be similar to 2019 levels, but that the impact on leverage will be limited by more moderate spending on land and development. - For these reasons, we are revising our rating outlook on WLH to negative from stable and affirming our 'B' issuer credit rating on the company. - We are also affirming our 'B+' issue-level rating on the company's senior unsecured debt. - The negative outlook indicates the possibility that we will lower our rating on William Lyon over the next year if credit metrics weaken further, such that debt to capitalization rises above 60%, EBITDA interest coverages approaches 1.5x, and debt to EBITDA rises above 7x....

Research Update