Moody's cuts KB Home view to stable

Moody's Investors Service said it affirmed the ratings of KB Home, including its corporate family rating of Ba1, senior debt rating of Ba1 and senior subordinated debt rating of Ba2, and revised the outlook to stable from positive.

The outlook revision reflects Moody's expectation that KB Home will not reduce debt leverage to investment-grade levels in the near-to-intermediate future and that other concerns, principally share repurchases, remain a higher priority for the company.

Moody's said the rating affirmations incorporate the company's leading share position in many of the markets that it serves, successful track record both in de novo expansions and in integrating numerous acquisitions and its long and successful history through various housing cycles.

However, the ratings also consider the financial and integration risks that accompany an aggressive expansion strategy, the still-sizable concentration of land inventory values and profits in California, the growing proportion of profits coming out of one market - Las Vegas - and the historically large share repurchase program.

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