D.R. Horton issues $700M in Senior Notes due 2035

D.R. Horton, Inc. (DHI), a leading home construction company with a market capitalization of $41.6 billion, has entered into an agreement to offer $700 million in Senior Notes with a 5.500% interest rate, maturing in 2035. The transaction, involving underwriters led by Mizuho (NYSE:MFG) Securities USA LLC, J.P. Morgan Securities LLC, and TD Securities (USA) LLC, is set to close today, subject to customary conditions.

The offering was made through a prospectus supplement filed on February 21, 2025, and is part of a registration statement on Form S-3. The notes will be guaranteed by certain subsidiaries of D.R. Horton and will be issued under an existing indenture with Truist Bank, supplemented by a new agreement specific to these notes.

Legal opinions related to the issuance of the notes have been provided and filed as part of the company’s regulatory disclosures. The new funding is expected to provide D.R. Horton with additional capital for its operations and potential expansion. The notes will be represented by global securities, with the full terms detailed in the exhibits filed with the SEC.

This financial move by D.R. Horton comes as the company continues to navigate the housing market, leveraging its position to secure long-term financing. The issuance of these notes reflects the company’s strategic financial planning and the ongoing demand for investment-grade instruments in the construction sector. With an EBITDA of $6.07 billion and current InvestingPro Fair Value analysis suggesting the stock is slightly undervalued, D.R. Horton demonstrates strong fundamentals in the housing sector. The information is based on a press release statement filed with the SEC and InvestingPro’s comprehensive analysis of over 100 financial metrics.

In other recent news, D.R. Horton has seen several significant developments. Moody’s Ratings upgraded the company’s senior unsecured notes to A3 from Baa1, reflecting its strong operational performance and conservative financial strategy. This upgrade was supported by Horton’s robust market position and liquidity. Meanwhile, S&P Global Ratings assigned a ’BBB+’ rating to D.R. Horton’s proposed senior unsecured note offering, highlighting the company’s low leverage and solid financial standing. On the analyst front, Citi adjusted its price target for D.R. Horton to $151.00, maintaining a Neutral rating due to concerns over margin pressures in the upcoming quarters.

Raymond (NSE:RYMD) James also maintained a Market Perform rating, citing challenges such as mortgage rate volatility and increased unsold inventory. Furthermore, the homebuilding sector, including D.R. Horton, is facing potential cost pressures due to a new 25% tariff on Canadian lumber imports. This has raised concerns about rising construction costs and their impact on the housing market. As these recent developments unfold, investors are keeping a close eye on D.R. Horton’s strategies to navigate the evolving market conditions.

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