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S&P gives CCC+ to Hovnanian notes
S&P said it affirmed the CCC+ corporate credit rating on Hovnanian Enterprises Inc.
The outlook is negative.
The agency also assigned a CCC+ issue-level rating to the company's proposed $840 million senior secured notes, issued by K. Hovnanian Enterprises Inc. The recovery rating is 4, indicating an expectation for average (30% to 50%; rounded estimate: 30%) recovery in the event of payment default.
S&P said the contemplated transaction will extend Hovnanian’s debt maturity profile while only modestly adding leverage.
The company is refinancing about $75 million of debt due 2018 and about $722 million due in 2020. The total amount of proposed debt will now be due in between five and seven years. Incremental debt of about $40 million will be added to the balance sheet to account for premiums and fees, but the agency views this incremental amount as credit neutral, and it does not affect S&P’s assessment of Hovnanian’s financial risk.
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