Fitch ends Adams Homes revolver review

Fitch Ratings said it removed Adams Homes, Inc.’s senior unsecured revolving credit facility from under criteria observation and affirmed its BB+/RR1 ratings. The agency also affirmed Adams’ B+ issuer rating and the unsecured notes at BB-/RR3.

“Fitch's corporates recovery ratings and instrument ratings criteria calls for capping unsecured debt instruments for issuers rated B+ at BB-/RR3. A variation from Fitch's corporate recovery ratings and instrument ratings criteria was made in rating Adams Homes' senior unsecured revolver BB+/RR1 as the instrument's credit agreement contains a springing-lien provision, which Fitch expects would be triggered well ahead of a distress scenario, resulting in the unsecured revolver becoming a secured facility.

“The company's unsecured bond indenture allows for the revolver to be secured without ratably securing the unsecured bonds,” the agency explained in a statement.

The outlook is stable.

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