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Hovnanian Enterprises’ Distressed Debt Exchange

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On January 5, 2018, Fitch Ratings downgraded Hovnanian Enterprises, Inc.’s Issuer Default Rating to C from CCC following the Company’s announcement that it will be exchanging up to $185 million of its $236 million 8% senior unsecured notes due November 1, 2019 for a combination of cash, new 13.5% senior unsecured notes due 2026 and new 5% senior unsecured notes due 2040. Fitch views this transaction as a distressed debt exchange.

On January 8, 2018, S&P Global Ratings lowered its corporate credit rating on Hovnanian Enterprises, Inc. to CC from CCC+ and its 8% senior secured notes due 2019 to CC from CCC-. According to S&P Global, the downgrade follows Hovnanian’s announcement of a proposed exchange offering for up to $185 million of its 8% senior notes due 2019 with $26.5 million of cash, up to $99.9 million of 13.5% unsecured notes due 2026 and up to $99.4 million of 5% unsecured notes due 2040. The exchange offer will be outstanding until January 29, 2018. S&P views this as a distressed exchange, if completed.  Read more on distressed companies.