Fitch shifts Meritage view to positive

Fitch Ratings affirmed the ratings of Meritage Homes Corp., including the company’s long-term issuer default rating at BB and revised the outlook to positive from stable.

The BB rating and positive outlook incorporate the company’s improving leverage levels and the shift toward the first-time/entry-level buyer segment, which is positioned better for the latter part of this upcycle. Net debt to capitalization was 33.3% (excluding cash classified by Fitch as not readily available for working capital purposes of $75 million) at the end of the third quarter of 2019 (3Q19). Fitch expects net debt to capitalization to remain in the mid-30% range during the rating horizon, below the positive rating sensitivity of this ratio sustaining below 40%.

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