United Utilities sees lower FY revenue on accounting impact of JV
March 28 Water utility company United Utilities Group Plc said it expected full-year revenue to be slightly lower due to the accounting impact of its Water Plus joint venture.
NEW YORK, Jan 31 (IFR) - US homebuilders are turning to the high-yield market in droves, taking advantage of earnings strength and improved housing data to achieve favorable rates to fund new construction.
Lennar Corp, D.R. Horton, Beazer Homes, Weekley Homes and Ashton Woods USA have all come with bond offerings this week.
On Wednesday, Lennar, the third-biggest US homebuilder, raised US$450m (decreased from US$500m) in six-year notes and an add-on to its 4.75% notes due 2022.
Lennar had reported better-than-expected fourth-quarter earnings in early January with management stating that low mortgage rates, affordable home prices, reduced foreclosures and a favorable "rent versus own" comparison continue to drive the US housing recovery.
D.R. Horton, the largest homebuilder in the US, priced a US$700m two-part offering of five-year and 10-year notes also on Wednesday. Investors, spooked by higher Treasury yields, showed preference for the shorter five-year paper.
A day earlier, D.R. Horton unveiled net income of US$66.3m for the quarter, up from US$27.7m a year earlier.
Positive housing data has also buoyed the new financings. The S&P/Case-Shiller Home Price indices showed home prices rose 4.5% for the 10-year City Composite and 5.5% for the 20-City Composite in the 12 months ending November 2012.
"Housing is clearly recovering," said David Blitzer, chairman of the index committee at S&P Dow Jones Indices.
Prices have risen along with new and existing home sales. Existing home sales totaled five million in November, the highest since Nov 2009. New homes sales at 398,000 were the highest since June 2010.
"These figures confirm that housing is contributing to economic growth," said Blitzer.
TIMING IT RIGHT
Lennar's and D.R. Horton's deals came after Weekley Homes and Beazer Homes priced deals earlier in the week. The timing for Beazer and Weekley was better as they priced ahead of Wednesday's softer high-yield market. But they were also viewed as more attractive because of their higher, less interest-rate sensitive coupons.
Beazer Homes sold a US$200m 10-year non-call five senior notes offering through Credit Suisse sole books. The Caa2/CCC rated issue priced at 7.25% at par, in line with talk. While the company reported a loss in its fiscal first quarter earnings due to a larger income tax benefit, it saw strong gains in home orders and completed sales.
Allan Merrill, president and CEO of Beazer, said challenges still remain before the industry can achieve a full turnaround.
But "improvements in consumer confidence coupled with low mortgage rates and enhanced clarity regarding mortgage qualification procedures should provide support for both increased demand for new homes and improved new home pricing during the balance of the year."
On Monday, first-time issuer Weekley Homes raised US$200m in a 10-year non-call four senior notes offering, through Credit Suisse, BofA Merrill, Wells Fargo and Zelman & Associates. The B2/BB- rated notes priced at 6% at par, on the tight end of guidance.
Finally, Ashton Woods USA is expected with a new US$250m eight-year non-call four senior unsecured notes offering (Caa1/B-) through JP Morgan and Wells Fargo joint books. Pricing is expected tomorrow, with proceeds being used for general corporate purposes. Those notes are talked at 7%-7.25%.
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March 28 Britain's FTSE 100 futures were up 0.4 percent ahead of the cash market open on Tuesday.