Moody's assigns Hovnanian notes Caa1

Moody's Investors Service said it assigned a Caa1 rating to K. Hovnanian Enterprises, Inc.'s 7¾% 1.125 lien senior secured notes due 2026 and 10½% 1.25 lien senior secured notes due 2026. Moody's also affirmed Hovnanian Enterprises Inc.’s corporate family rating at Caa2, probability of default rating at Caa2-PD, the rating on its preferred stock at Ca, and ratings on K. Hovnanian’s second-lien senior secured notes at Caa3 and senior unsecured debt at Caa3. The SGL-3 speculative grade liquidity rating is unchanged. The outlook is stable.

The company's 1.125 lien and 1.25 lien senior secured notes are rated Caa1, reflecting these notes' priority position in the capital structure compared to notes secured by further liens and unsecured debt. The notes are secured by substantially all assets of K. Hovnanian Enterprises, Inc. and the note guarantors.

Note guarantors include Hovnanian Enterprises, Inc. and its subsidiaries. The affirmation of corporate family rating at Caa2 reflects Moody's expectation the company will need to engage in ongoing restructuring activity given its highly levered capital structure.

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