S&P rates New Home notes B-

S&P said it assigned its B- corporate credit rating to the New Home Co. The outlook is stable.

At the same time, S&P assigned a B- issue-level rating and a 3 recovery rating to the homebuilder's proposed offering of $250 million of unsecured notes due 2022. The 3 recovery rating reflects an expectation of meaningful (50%-70%; rounded estimate: 55%) recovery to debtholders in the event of default.

The company plans to use a portion of the proceeds from the note offering to pay down its existing $118 million of outstanding borrowings on its revolving credit facility. It will use the rest of the proceeds to finance future growth and fees associated with the transaction.

“The stable outlook is supported by the New Home Co. possessing sufficient land and liquidity to meaningfully improve EBITDA over the next 12 months,” said S&P credit analyst Thomas O'Toole in a news release.

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