Fitch cuts Kaufman & Broad to junk

Fitch Ratings said it downgraded Kaufman & Broad SA's long-term issuer default rating and senior unsecured rating to BB- from BBB-. The issuer's short-term issuer default also was downgraded to B from F3. The long-term issuer default and senior unsecured rating remain on Rating Watch negative.

Fitch also downgraded the €150 million 8¾% senior notes due 2009 to BB- from BBB-, in line with the senior unsecured rating.

The downgrade reflects heightened financial risk and expected leverage following the announcement that Financiere Gaillon 8 SAS, an investment vehicle owned by private equity group PAI Partners, has completed its acquisition of a 50.3% controlling stake in the company.

The Rating Watch negative reflects FG8's declared intention to launch a simplified tender offer for the remaining 49.7% free-float that it does not already own, which could further increase leverage, the agency said.

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