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S&P rates Meritage notes B+
Standard & Poor's said it assigned a B+ rating and 3 recovery rating to Meritage Homes Corp.'s proposed offering of $150 million of unsecured senior notes due 2018.
The 3 recovery rating indicates 50% to 70% expected default recovery.
The outlook is stable.
The proceeds will be used to repurchase or redeem the $99.8 million in 7.731% senior subordinated notes due 2017 and general corporate purposes.
The notes will be fully and unconditionally guaranteed by all wholly owned subsidiaries on a joint and several basis, S&P said.
The ratings reflect the homebuilder's aggressive financial risk profile as evidenced by EBITDA-based credit metrics that have improved over the past year, the agency said, but remain weak for the current rating.
S&P said it expects these metrics to continue improving as a recovering housing market supports better absorption and overall volume.
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