S&P raises KB Home, notes to B+

S&P said it raised its corporate credit rating on KB Home and its issue-level ratings on the company's senior unsecured notes to B+ from B. The recovery rating on the unsecured debt is unchanged at 3, reflecting an expectation for meaningful (50%-70%; rounded estimate: 65%) recovery to debtholders in the event of default.

The outlook is positive.

The agency said it believes KB Home will continue to achieve significant revenue and earnings growth through 2018, following better-than-expected financial and operating results in the first half of 2017.

“We expect debt leverage to fall below 5x by the end of the fiscal year compared with 5.6x for the 12 months ended May 31, and 6.2x at year-end 2016. In addition, we expect EBITDA interest coverage to improve toward 3x and adjusted debt to capital to fall to 54% by the end of the fiscal year, compared with 2x and 57%, respectively, in the previous period,” S&P said in a news release.

The agency said the positive outlook on KB Home reflects its forecast for stronger EBITDA driven by continued home closing volume growth and higher EBITDA margins, causing leverage to improve to the mid-4x area as the company increases its home sale volume over the next 12 months.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.