Moody's rates KB Home notes B1

Moody's Investors Service said it assigned B1 (LGD 4) ratings to KB Home's proposed $300 million of senior unsecured notes due 2027, along with a B1 (LGD 4) rating to its proposed $100 million add-on to existing 7 6/8% senior unsecured notes due 2023.

All of the other ratings on the company are unchanged.

The outlook is positive.

The proposed notes are being issued to address the upcoming maturity of KB Home's $400 million 4¾% senior unsecured notes due in May 2019.

Meanwhile, the company used cash on hand to retire $230 million of its 1 3/8% convertible senior notes upon their expiration Feb. 1, the agency noted.

These transactions are credit positive given the resulting reduction in leverage, Moody's said.

The company also is expected to continue making progress in de-leveraging its capital structure and strengthening its key metrics throughout the year, as it builds scale, the agency said.

A concern for ratings, however, is the recent softening in the U.S. homebuilding industry, as reflected in declining new orders and reduced pricing power, Moody's added.

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