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5 年前
TEXT-S&P: Hovnanian ratings remain on watch positive
2012年10月4日 / 晚上6点13分 / 5 年前

TEXT-S&P: Hovnanian ratings remain on watch positive

Oct 4 - Standard & Poor's Ratings Services today said that its ratings,
including the 'CCC-' corporate credit rating, on Hovnanian Enterprises Inc.
 remain on CreditWatch with positive implications. We placed the ratings
on Credit Watch with positive implications on Sept. 19, 2012, after the company
announced that it would issue new senior secured notes and senior exchangeable
notes to refinance existing senior secured notes. We expect to resolve the
CreditWatch listing upon the full redemption of the 2016 notes, which we expect
to occur on Nov. 1, 2012. 

Hovnanian recently completed the sale of $577 million of 7.25% first-lien 
senior secured notes due 2020, $220 million of second-lien senior secured 
notes due 2020, and $100 million of 6% senior exchangeable notes due 2017. As 
of Oct. 2, 2012, the company has redeemed $637.2 million (79.95%) of the 
10.625% senior secured notes due 2016 that were tendered as of Oct. 1, 2012 
(early tender deadline), and issued a notice of redemption to holders of the 
remaining $159.8 million notes to redeem the notes on Nov. 1. 

This transaction significantly lengthens the company's debt tenor by 
addressing the bulk of its 2016 debt maturity wall. Hovnanian's 2016 
refinancing exposure declines to $218 million from slightly more than $1 
billion, while the company's interest burden is reduced by $17 million. We 
believe extending this significant maturity and reducing the interest burden 
will help preserve cash and provide additional running room to improve 
operations/profitability as housing slowly recovers and the company continues 
to take steps to reduce its significant overall debt burden.

CreditWatch

We intend to resolve the CreditWatch listing upon the completion of the 
redemption of the remaining outstanding 10.625% senior secured notes due 2016. 
At that time, we expect to raise our corporate credit rating on the company 
two notches to 'CCC+' from 'CCC-'. We would also expect to raise our rating on 
the builder's existing senior secured notes due 2021 to 'CCC' from 'CC' and 
senior unsecured notes due 2014-2017 to 'CCC-' from 'CC'.

RELATED CRITERIA AND RESEARCH

     -- Industry Economic And Ratings Outlook: U.S. Home Buyers Return, But 
Can Builders Deliver? July 20, 2012
     -- Issuer Ranking: U.S. Homebuilders, Strongest To Weakest, July 23, 2012
     -- Key Credit Factors: Global Criteria For Single-Family Homebuilders, 
Sept. 27, 2011
     -- Use Of CreditWatch And Outlooks, Sept. 14, 2009
 
RATINGS LIST 

Hovnanian Enterprises Inc.
Corporate credit rating         CCC-/Watch Pos     
Senior unsecured                CC/Watch Pos 
Recovery Rating                 6                  

K. Hovnanian Enterprises Inc. 
Senior Secured due 2021         CC/Watch Pos                     
 Recovery Rating                5  
Senior Unsecured                CC/Watch Pos
 Recovery Rating                6       

First Lien Senior Secured
Notes due 2020                 CCC+
 Recovery Rating               3
Second Lien Senior Secured
Notes due 2020                 CCC-
 Recovery Rating               6
Exchangeable Notes due 2017    CCC-
 Recovery Rating               6  

Hovnanian Enterprises Inc.
Preferred Stock                C


Complete ratings information is available to subscribers of RatingsDirect on 
the Global Credit Portal at www.globalcreditportal.com. All ratings referenced 
herein can be found on Standard & Poor's public Web site at 
www.standardandpoors.com. Use the Ratings search box located in the left 
column.

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