Moody's gives B2 to Adams Homes notes

Moody's Investors Service said it assigned a B2 rating to Adams Homes, Inc.'s upcoming sale of $250 million of senior unsecured notes due 2028. Adams Homes' other ratings, including its B2 corporate family rating and B2-PD probability of default rating, and stable outlook remain unchanged.

The proceeds of the new notes will be used to fund a $100 million partial tender offer of the company's 7½% senior unsecured notes due 2025, which had $182.5 million outstanding as of June 30 and pay down the balance on the company's revolving credit facility and for general corporate purposes.

Adams’ pro forma adjusted homebuilding debt to capitalization will increase to about 41% from 33%, as of June 30.

"Despite the increase in leverage, debt-to-book capitalization in the low 40% range remains in line with our expectation for 2023," said Griselda Bisono, a Moody's vice president and senior analyst. "This transaction provides some debt maturity extension which, in conjunction with the recently upsized and extended revolver, provides the company with enhanced financial flexibility", added Bisono. In July 2023 the company upsized its unsecured revolving credit facility to $325 million from $215 million and extended the maturity out to 2026.

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