Monday, October 5, 2009

Hovnanian Sells Some Great Bonds for Investors

This offer of bonds by the homebuilder Hovnarian (ticker HOV) is in my opinion a steal.

NEW YORK (Dow Jones)--K. Hovnanian Enterprises Inc., a wholly owned subsidiary of Hovnanian Enterprises Inc. (HOV), priced $785 million of senior secured first-lien notes in a private placement via lead bookrunners Credit Suisse and Citi, according to a person familiar with the matter. Terms were as follows:

Amount:         $785 million  Maturity:       Oct. 15, 2016  Coupon:         10.625%  Issue Price:    98.208  Yield:          11.0%  Spread:         821 basis points over Treasurys  Settlement:     Oct. 20, 2009 (T+10)  Call:           Noncallable for 3 years  Ratings:        B1(Moody's Investors Service)                  CCC+ (Standard & Poor's)   

Proceeds, together with cash on hand, will fund the company's previously announced tender offers for its outstanding second- and third-lien senior secured notes and certain series of senior unsecured notes.


-By Michael Aneiro, Dow Jones Newswires; 212-416-2203;

What is there not to like about these bonds?

11% yield


Noncallable for three years.

The cash raised will be wisely used.

I like these bonds---a whole lot.

Robert J. Abalos, Esq.