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Moody's downgrades Standard Pacific

The Associated Press

NEW YORK (AP) — Moody's Investors Service lowered all its ratings for homebuilder Standard Pacific Corp. on Friday, saying the company will generate weaker cash flow this year and even less next year amid the deep slump in the housing market.

The ratings were already below investment-grade or in so-called "junk" territory.

Moody's lowered Standard Pacific's corporate family rating to "Caa1" from "B2," senior unsecured notes to "Caa1" from "B2," and senior sub notes to "Caa3" from "Caa1."

The agency also assigned the company's debt a "negative" outlook.

Moody's had placed the Irvine, Calif.-based company on review for a possible downgrade Feb. 4.

On Friday, it said Standard Pacific's cash flow "will weaken considerably in 2009 and be followed by an even weaker 2010."

Moody's said the company had "picked the low-hanging fruit" by reducing inventory and speculative building and now faces the tougher job of shrinking or closing some joint ventures and putting their land and debt on Standard Pacific's books.

Moody's expects the company to take more impairment charges this year and to continue posting operating losses well into 2010.

Standard Pacific lost $1.23 billion in 2008, with sales falling 47 percent — and 60 percent in the fourth quarter. Like other builders, it has been writing down the value of its real-estate inventory as the housing market has sunk.

Shares of Standard Pacific fell 5 cents, or 6.8 percent, to 70 cents in midday trading.