Moody's may cut Kaufman & Broad

Moody's Investors Service said it placed Kaufman & Broad SA's Ba1 corporate family rating and Ba2 €150 million senior notes due 2009 on review for downgrade following the announcement by Kaufman & Broad's main shareholder, KB Home (Ba1/negative), that it has granted exclusivity to PAI Partners for the sale of its entire 49% ownership interest in Kaufman & Broad for a consideration of €600 million.

The review was prompted by the agency's concerns that the potential transaction may result in a change in the group's capital structure if the new owners decide to further leverage up the business to fund part of the €600 million purchase price. Moody's said the ratings could be downgraded by more than one notch depending upon the future business and financial profile of the group.

Bondholders remain protected by a change-of-control clause that would allow them to tender their notes if a person or a group becomes the owner of more than 35% of Kaufman & Broad's share capital and the rating on the bond is downgraded below Ba2, the agency noted.

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