S&P affirms KB Home

Standard & Poor's said it affirmed its BB+ corporate credit and senior note ratings and its BB- senior subordinated note rating on KB Home and removed them from CreditWatch, where they were placed with negative implications on Oct. 25.

The outlook is negative.

The CreditWatch removals follow the completion of the company's internal investigation into its stock option practices and the subsequent filing of its delayed third-quarter 2006 financials, which cured previously issued notices of technical default, the agency said.

S&P noted that the affirmed ratings acknowledge the company's good liquidity position, specifically its demonstrated ability to generate substantial positive free operating cash flow and a renewed focus on strengthening the balance sheet while these positive factors currently offset a very challenging housing market that will negatively affect earnings and stress already weakening coverage measures.

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