Fitch affirms KB Home

Fitch Ratings said it affirmed KB Home's issuer default rating at BB+, senior unsecured at BB+, unsecured bank credit facility at BB+ and senior subordinated debt BB-.

The outlook remains negative.

According to Fitch, the outlook reflects the difficult housing environment and expectations that it will be more challenging than expected for the rest of 2008.

The outlook also reflects KB Home's operating margins, further deterioration in credit metrics and erosion in tangible net worth from non-cash real estate charges.

KB Home's liquidity position provides a buffer and supports ratings, the agency noted.

Ratings reflect KB Home's execution of its business model, focus on entry-level and first-step trade-up housing, its conservative building practices and effective use of return on invested capital criteria as a key element of its operating model, the agency said.

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