S&P rates FG8 notes B

Standard & Poor's said it assigned a preliminary B long-term corporate credit rating to Financiere Gaillon 8 SA (FG8), the holding company of Kaufman & Broad SA.

The agency also said it assigned a preliminary B rating to the group's proposed €370 million senior notes due 2019 to be issued by FG8. The preliminary recovery rating on these notes is 4, indicating 30% to 50% expected default recovery.

The outlook is stable.

The ratings reflect the group's fair business risk profile and highly leveraged financial risk profile, S&P said.

The ratings also consider the group's exposure to the very cyclical and competitive residential property development industry, including volume and price cyclicality and high sensitivity to interest-rate changes, the agency said.

The new-build market is currently experiencing a low point in France amid challenging macroeconomic conditions, S&P said.

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