D.R. Horton issues $700M in senior notes due 2035

In a significant financial move, D.R. Horton, Inc. (NYSE:DHI), a leading home construction company with a market capitalization of $40.36 billion, finalized a public offering of $700 million in senior notes on Tuesday. According to InvestingPro data, the company maintains a moderate debt level with a healthy total debt-to-capital ratio of 0.11. The notes, with a 5.500% interest rate, are set to mature on October 15, 2035.

The Arlington, Texas-based company, trading under the symbol (NYSE:DHI), announced the completion of the offering in a recent SEC filing. The net proceeds from the sale, after deducting the underwriting discount, amounted to $695.2 million.

These senior notes are unsecured and rank equally with the company’s other unsecured and unsubordinated debt. D.R. Horton’s current homebuilding subsidiaries guarantee the notes, offering additional security to investors. The company’s strong financial position is evidenced by its impressive current ratio of 6.77, indicating that liquid assets substantially exceed short-term obligations - one of several key metrics available through InvestingPro’s comprehensive analysis tools.

Investors should note the company’s option to redeem the notes at any time, with specific terms outlined for redemptions before and after July 15, 2035. In the event of a company change of control coupled with a rating downgrade, the company must offer to repurchase the notes at 101% of their principal value, plus accrued interest.

The offering’s legal framework is established by the Senior Debt Securities Indenture, dated October 10, 2019, and the Seventh Supplemental Indenture, dated February 26, 2025, between D.R. Horton and Truist Bank as trustee.

This strategic financial maneuver enables D.R. Horton to secure long-term capital, potentially for funding new projects, refinancing existing debt, or other corporate purposes. The transaction is based on a press release statement and reflects the company’s ongoing efforts to manage its financial structure.

Investors and market watchers will likely follow the performance of these notes, which contribute to the company’s broader financial strategy in the competitive real estate and construction sector. While the stock is currently trading near its 52-week low and has experienced a significant decline over the past six months, InvestingPro’s Fair Value analysis suggests the stock may be undervalued, presenting a potential opportunity for investors. For detailed insights and access to the comprehensive Pro Research Report covering D.R. Horton and 1,400+ other US stocks, consider exploring InvestingPro’s advanced analytics platform.

In other recent news, D.R. Horton has issued $700 million in Senior Notes with a 5.500% interest rate, set to mature in 2035. This financial move is expected to provide the company with additional capital for operations and potential expansion. S&P Global Ratings assigned a ’BBB+’ rating to these proposed notes, indicating confidence in the company’s low leverage and financial stability. Moody’s Ratings has upgraded D.R. Horton’s senior unsecured notes to A3 from Baa1, citing strong operational performance and a conservative financial strategy.

Meanwhile, the company faces challenges due to a 25% tariff on Canadian lumber imports, which could increase construction costs and affect profitability. Raymond (NSE:RYMD) James maintained a Market Perform rating on D.R. Horton, expressing concerns about mortgage rate volatility and rising unsold inventory. Despite these challenges, D.R. Horton’s strong market position, particularly in rental housing, could help mitigate some of the pressures. The company’s fiscal year 2025 earnings estimates have been reduced by 4%, reflecting ongoing market uncertainties.

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