Fitch rates KB Home notes B+

Fitch Ratings said it assigned a B+ rating with a recovery rating of RR4 to KB Home's proposed offering of $300 million of senior unsecured notes due March 2019.

The new issue will be equal in right of payment with all other senior unsecured debt, Fitch said.

The company has an issuer default rating of B+ and a B+ senior unsecured debt rating with recovery rating of RR4.

The company also is offering $125 million of common stock. The company intends to use the proceeds of these issuances for general corporate purposes, including land acquisitions and development, the agency said.

The outlook is stable.

The ratings are based on the company's geographic diversity, customer and product focus, conservative building practices and the housing recovery, Fitch said.

The company did a good job in reducing its inventory exposure and generating positive operating cash flow during the severe industry downturn, the agency said.

The ratings also consider its current heavy exposure to entry-level and first-step trade-up housing, Fitch said.

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