S&P ups Hovnanian, rates notes, loan CCC-

S&P said it raised its corporate credit rating on Hovnanian Enterprises Inc. to CCC+ from SD (selective default).

The outlook is stable.

The agency also assigned CCC- issue-level ratings to the newly exchanged $90.6 million 13½% unsecured notes due 2026 and the $90.1 million 5% unsecured notes due 2040. The recovery rating is 6, indicating an expectation for negligible (0%-10%; rounded estimate 0%) recovery in the event of payment default.

S&P assigned a CCC- issue-level rating to K. Hovnanian Enterprises Inc.'s newly issued $212.5 million senior unsecured term loan facility due 2027, which consists of $132.5 million term loan and $80 million delayed-draw term loan. The recovery rating is 6, indicating an expectation for negligible (0%-10%; rounded estimate 0%) recovery.

In addition, the agency affirmed the B issue-level ratings on K. Hovnanian's $75 million secured term loan due 2019. The recovery rating remains 1, indicating an expectation for very high (90%-100%; rounded estimate 95%) recovery.

The agency affirmed the CCC+ issue-level ratings on the company's $440 million senior secured notes due 2022 and $400 million senior secured notes due 2024. The recovery rating remains 4, indicating an expectation for average (30%-50%; rounded estimate 30%) recovery.

S&P also affirmed the CCC issue-level ratings on the company's $75 million 9½% first-lien notes due 2020 and both the 2% and 5% senior secured notes due 2021. The recovery rating remains 5, indicating an expectation for modest (10%-30%; rounded estimate 20%) recovery.

In addition, the agency affirmed the D issue-level rating on the company's 8% senior notes due 2019 because the new notes contain covenants preventing the company from making any interest payments before maturity. The recovery rating is unchanged at 6, indicating an expectation for negligible (0%-10%) recovery.

S&P said the upgrade reflects a reassessment following a refinancing transaction in which the company completed a partial debt exchange that extended its maturity profile.

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