Moody's: KB Home notes B2

Moody's Investors Service said it assigned a B2 (LGD 4, 52%) rating to KB Home's proposed $250 million of senior unsecured notes due 2020, which will be a drawdown under the shelf registration for well-known seasoned issuers that was filed in September 2011.

The agency also said it assigned a provisional B2 rating to the shelf and affirmed the company's B2 corporate family rating, B2 probability of default rating, B2 rating on the existing senior unsecured notes and SGL-2 speculative-grade liquidity assessment.

The outlook is stable.

The proceeds will be used to purchase the tendered amount of the company's existing senior unsecured notes due 2014 and 2015.

The cash tender offer for the company's 5¾% senior notes due 2014, 5 7/8% senior notes due 2015 and 6¼% senior notes due 2015 for an aggregate amount of up to $250 million was announced Jan. 19, Moody's said.

The ratings reflect the debt neutral nature of the proposed transaction as no incremental debt will be created, the improvement in the company's liquidity profile by the extension of debt maturities and an expectation that KB Home's credit metrics will gradually begin to improve in the intermediate time horizon, Moody's said.

The ratings also consider the repayment of the company's contractual obligations relating to the South Edge joint venture and the resulting improvement in adjusted homebuilding debt leverage, the agency said.

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