Moody’s assigns STL, notes B3

Moody’s Investors Service said it assigned a B3 rating to the planned $225 million of senior unsecured notes of STL Holding Co., LLC (DSLD Homes). Also, Moody’s assigned a B3 corporate family rating and a B3-PD probability of default rating to DSLD Homes.

“DSLD Homes’ B3 corporate family and senior unsecured ratings reflect Moody’s expectation that the company will experience modest margin contraction coupled with a decline in revenue over the next 12 months, followed by a subsequent recovery,” Moody’s said in a press release.

The proceeds will be used to repay borrowings on the company’s revolving credit facility of about $195 million, with the remainder used for transaction fees and expenses and general corporate purposes. After the notes offering, the company expects to put in place a $75 million unsecured revolving credit facility.

The outlook is stable because the agency said it expects to see an improvement in new home sales, especially in the entry-level home market, while DSLD maintains adequate liquidity.

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