Moody's upgrades Hovnanian

Moody's Investors Service said it upgraded Hovnanian Enterprises, Inc.'s corporate family rating to B3 from Caa1 and probability of default rating to B3-PD from Caa1-PD. The agency also raised the ratings on K. Hovnanian Enterprises, Inc.'s 1.125 lien and 1.25 lien senior secured notes due 2026 to B3 from Caa1 and the senior unsecured notes and senior unsecured term loans to Caa2 from Caa3.

Concurrently, Moody’s lifted Hovnanian's preferred stock to Caa3 from Ca. The SGL-3 speculative grade liquidity rating is unchanged, but the agency revised the outlook to stable from positive.

“The upgrade of the corporate family rating reflects the strengthening of Hovnanian's credit profile through improved profitability, growth in scale, a series of completed and planned debt reductions, and the resulting deleveraging. The company's focus on deleveraging, a governance consideration, including the establishment of a long-term public leverage target, supports its credit profile. Moody's expects Hovnanian's total debt to capitalization leverage to approach low 70% in the next 12 months,” the agency said in a press release.

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