Moody’s rates KB Home notes B2

Moody's Investors Service said it assigned a B2 rating to KB Home's proposed $250 million unsecured notes due 2023.

Proceeds are expected to go toward retiring the company's 6¼% 2015 unsecured notes and/or for general corporate purposes.

KB Home's other ratings, including its B2 corporate family rating, are unchanged.

Moody’s said the B2 corporate family rating considers KB Home's moderate interest coverage of slightly above 1 time. In addition, the rating reflects significant negative cash flow generation, which is expected to persist in the intermediate term from the accelerated land spend, and a modest tangible equity base.

The company's debt leverage, albeit still high, declined to around 64% at Sept. 30 from 82% in fiscal 2013 partly because of deferred tax asset reversal, the agency said.

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