Moody’s upgrades KB Home, notes to B1

Moody's Investors Service said it upgraded KB Home's corporate family rating to B1 from B2, probability of default rating to B1-PD from B2-PD, unsecured notes to B1 from B2 and senior unsecured shelf registration to provisional B1 from provisional B2.

The speculative-grade liquidity rating of SGL-2 was affirmed and the outlook was changed to stable from positive.

Moody’s said the upgrade of the corporate family rating to B1 reflects its expectation that KB Home's financial performance will continue to improve, enhancing the company's credit metrics.

The agency anticipates the company's homebuilding debt to book capitalization to decline below 60% in 2017 and trend toward 50% by the end of fiscal 2019 (fiscal year end November 30).

The rating is also supported by KB Home's size with 2016 revenues of $3.6 billion and just under 10,000 new home deliveries.

Moreover, Moody’s said, the company's geographic diversification is a key credit driver, KB Home operates in 36 markets and four geographic regions, including the west, southwest, central, and southeast.

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