S&P rates KB Home notes B

Standard & Poor's said it assigned its B rating and 4 recovery rating to KB Home's proposed issuance of $250 million of senior notes due 2021. The 4 recovery rating indicates an expectation for average recovery in the event of default.

On July 11, the company announced a tender offer for up to $250 million of its 2014 and 2015 senior notes.

According to S&P, this transaction will reduce near term maturity risk, most notably its next maturity in 2014, but the company will still face relatively large 2015 maturities in excess of $300 million.

If KB Home raises incremental debt, it would improve its cash liquidity position, which is a key credit support, but at the same time leverage would remain very high for the rating.

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