S&P rates M/I Homes notes BB-, trims convertible to B-

S&P said it assigned its BB- issue-level rating to M/I Homes' proposed $250 million senior unsecured notes due in 2025. The 2 recovery rating on all of the company's senior unsecured notes indicates an expectation for substantial (70%-90%; rounded estimate: 75%) recovery to debtholders in the event of a default.

At the same time, S&P lowered its issue-level ratings on the company's convertible senior subordinated notes (which mature in 2017 and 2018) to B- from B+ and the recovery ratings to 6 from 4. The 6 recovery rating indicates an expectation for negligible recovery (0%-10%; rounded estimate: 0%) in the event of default.

Separately, S&P corrected its issue-level rating on M/I's preferred shares to CCC+, three notches below the B+ corporate credit rating, per S&P’s hybrid securities criteria.

“Our assessment of M/I's business risk profile incorporates our view of the capital-intensive nature and cyclicality associated with the U.S. homebuilding industry, mixed market penetration success, and what we view as average profitability,” S&P said in a news release.

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