Toll Brothers, Inc., (TOL), a leading homebuilder in the US, recently announced the pricing of senior notes worth $100 million due Apr 15, 2023. The notes were issued by Toll Brothers Finance Corp., a wholly-owned subsidiary of Toll Brothers. The notes carry a coupon of 4.375%.
The issuance will close on May 13, 2013. The senior notes will pay interest semi-annually on Apr 15 and Oct 15, starting Oct 15, 2013. The company previously issued senior notes worth $300 million due Apr 15, 2023 on Apr 3, 2013.
Toll Brothers intends to use the net proceeds to meet general corporate expenses, which may include the repurchase of its outstanding debt.
The increasing momentum of housing market recovery, backed by lower home prices and moderating interest rates is luring buyers to new homes. Demand for new homes is increasing in many of the U.S markets. As a result, most of the homebuilding companies are aggressively investing in land and building new homes in order to meet the increasing demand.
Homebuilders, like Toll Brothers, with significant land positions, broad geographic and product diversity and better capital positions are expected to benefit the most as market conditions recover. Toll Brothers expects to end fiscal 2013 with 225 to 255 selling communities. The community count is expected to grow thereafter in 2014. The recent senior notes issue will improve the company’s liquidity position and help it achieve its community count target.
Toll Brothers currently carries a Zacks Rank #3 (Hold).
Other stocks in the homebuilding sector that are performing well and deserve a mention include D. R. Horton Inc. (DHI), Ryland Group Inc. (RYL) and MDC Holdings Inc. (MDC). While D. R. Horton and Ryland Group carry a Zacks Rank #1 (Strong Buy), MDC holds a Zacks Rank #2 (Buy).
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