Moody's affirmed its ratings on homebuilder KB Home, while revising the ratings outlook to positive from stable.
The ratings affected include the company's B1 corporate family rating, B1-PD probability of default rating, B1 rating on senior unsecured notes, (P)B1 rating on senior unsecured shelf registration and SGL-2 speculative-grade liquidity rating.
The rating agency said the revised outlook takes into account KB Home's improving financial strength and operating performance and its expectations that the company will de-lever below 45% Moody's homebuilding debt-to-book capitalization ratio and improve its Homebuilding EBIT-to-interest coverage above 4.0x over the next 12 to 18 months.
Moody's expects this improvement will stem from continued earnings growth and the company's positive free cash flow generation, which can be applied to decrease debt.
