S&P rates KB Home notes B

Standard & Poor's said it affirmed the B corporate credit rating on KB Home, along with the B ratings on the company's existing senior notes.

The 3 recovery rating on this debt is unchanged.

The agency also said it assigned a B rating to the company's proposed $300 million senior unsecured notes due 2019. The recovery rating is 3, indicating 50% to 70% expected default recovery.

KB Home will use net proceeds from this debt issuance, along with a $125 million equity sale, to raise cash for land acquisition and development funding purposes, S&P said.

The outlook is stable.

The ratings incorporate the homebuilder's fair business risk profile and highly leveraged financial risk profile, S&P said.

The ratings also consider KB Home's homebuilding platform, which is diversified across 10 states and 40 markets, yet has concentrations in Texas, Florida and California, the agency said.

These markets are currently healthy and should produce good demand for homes, S&P added.

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