Standard Pacific Sinking in Debt

The company, which couldn't be reached for comment on this story, has more than $2 billion of debt and a market cap of $315 million. While the overall level of debt is troubling, the maturity schedule could break the builder's back.

Standard Pacific is one of only two homebuilders that have debt maturities coming due in each of the next four years, according to CreditSights. The other is Centex(CTX Quote).

Standard Pacific has recently run up against financial ratio covenants on its credit facility, which is its lifeblood. This year, the company has already gone back to its bank twice to amend indentures that cover its banking agreements.

The more land impairments the builder reports, the more shareholder's equity gets reduced on the balance sheet. This results in Standard Pacific coming up against maximum debt-to-tangible-net-worth requirements in covenants.

The company's contingent liabilities in its joint ventures also trouble CreditSights. As homebuilding sales slow in the joint ventures, Standard Pacific has been forced under the agreements to inject more cash into the partnerships.

"The JV's continue to bleed, and they have to support them," Lee says.

Last quarter, Standard Pacific paid $25 million to two of its Southern California joint ventures to help fund a margin call from a lender. The company also spent $81.6 million to pay off the debt in conjunction with buying out its partner's interest in a Northern California joint venture.