Fitch revises KB Home view to stable

Fitch Ratings said it revised KB Home's outlook to stable from positive and affirmed the company's BB+ issuer default rating, BB+ senior unsecured debt and revolving credit facility and BB- senior subordinated debt.

Fitch said a positive outlook was predicated on the assumption that credit metrics would further improve and then be generally maintained for a reasonable period of time. Prospects of that occurring over the next few quarters or even next 12 months now appear unlikely due to a broadly deteriorating housing market.

The ratings reflect KB Home's solid, consistent profit performance in recent years and the expectation that the company's credit profile will be maintained or continue to improve as it executes its business model, the agency said.

The ratings also take into account KB Home's primary focus on entry-level and first-step trade-up housing (the deepest segments of the market), its conservative building practices and effective use of return on invested capital criteria as a key element of its operating model.

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