Moody's upgraded its corporate family rating on TRI Pointe Homes, Inc. to Ba3 from B1, with a change in outlook to stable from positive.
In addition, the rating agency upgraded its rating on the company's probability of default to Ba3-PD from B1-PD and the rating on TRI Pointe's senior unsecured notes to Ba3 from B1, while affirming its speculative-grade liquidity rating at SGL-2.
The upgrade in the corporate family rating mirrors the company's strong performance and healthy credit metrics, leading Moody's to expect a debt to book capitalization maintained below 45% along with a homebuilding EBIT interest coverage of over 4.5x by the company in 2017.
Meanwhile, the rating agency credits TRI Pointe's SGL-2 rating to its good liquidity over the next 12 to 18 months, taking into account internal and external liquidity sources, covenant compliance and alternate sources of liquidity.
Moody's further highlighted the contribution of $129 million of unrestricted cash on hand to internal liquidity sources as of March 31. However, Moody's expressed concerns that the company will face a negative cash flow in 2017 due to continued land investments.
The stable outlook is backed by Moody's expectation that TRI Pointe will maintain solid credit metrics over the next 12 to 18 months.