S&P rates KB Home notes B+

Standard & Poor's said it affirmed the B+ corporate credit rating on KB Home.

The agency also said it assigned a B+ rating and 4 recovery rating to the company's proposed $250 million senior notes due 2020.

The 4 recovery rating indicates 30% to 50% expected recovery in a default.

The outlook is negative.

The ratings reflect the company's highly leveraged financial profile, S&P said.

The prolonged housing downturn substantially reduced KB Home's revenues and negatively affected profitability and EBITDA-based credit metrics, despite meaningful debt reduction since the downturn began, the agency said.

KB Home's market position in certain key metropolitan areas and investments in new product and communities should contribute to higher volume in 2012, S&P said, but profitability will likely be elusive in the current fiscal year.

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