Moody's raises Beazer notes to B2

Moody's Investors Service said it upgraded the ratings for Beazer Homes USA, Inc.'s senior unsecured notes to B2 from B3. The agency also revised the outlook to positive from stable and affirmed Beazer's B2 corporate family rating and B2-PD probability of default rating. The company's SGL-2 speculative grade liquidity rating was maintained.

“The upgrade of Beazer's senior unsecured note ratings to B2 from B3 reflects the change in the company's capital structure given the replacement of its $250 million senior secured revolving credit facility maturing in 2023 with a new $265 million unsecured revolving credit facility expiring in 2026. The B2 rating on the company's unsecured notes, at the same level with its corporate family rating, reflects the unsecured nature of the vast majority of its capital structure, with the exception of junior subordinated notes due 2036 that provide loss absorption in a distressed scenario,” Moody’s said in a press release.

The improved outlook reflects the position that over the next few quarters Beazer will cut its leverage on a sustainable basis below 50% total debt to capitalization by increasing its net worth while maintaining interest coverage above 3x and good liquidity with positive free cash flow, the agency explained.

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