Moody’s reviews Keepmoat

Moody's Investors Service said it placed the B2 corporate family rating and B2-PD probability of default rating of Keystone Midco Ltd. (Keepmoat) under review with direction uncertain.

Concurrently, the agency placed the B3 instrument rating for the £263 million senior secured notes, issued at subsidiary Keystone Financing plc, under review with direction uncertain.

The action follows Keepmoat's March 2 announcement that it disposed of its Regeneration division. The transaction is expected to close in the second quarter of 2017.

Moody’s said the action reflects the materially changed business risk of the remaining Keepmoat business, given that the Regeneration division accounted for 71% of fiscal year 2016 revenues and 59% of fiscal year 2016 company-adjusted EBITDA.

“The remaining business, formerly the Homes division, is focused on residential home-building in partnership with local authorities and registered providers. Moody's considers this business to be more cyclical, capital-intensive and exposed to market factors such as interest rates or the availability of mortgage financing,” the agency said in a news release.

“However, these risks are also partly balanced by the company's partnership business model and an ongoing favorable market environment that has led to strong revenue and EBITDA growth over the last 2 years.”

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