Citigroup Global Markets worked its way into a co-lead role on KB Home's new $1.5 billion revolver by keeping in close contact with the company over the past several years, said Kelly Masuda, treasurer for KB Home. Citi had been part of the syndicate on a Banc of America Securities-led $1 billion, but it moved into a lead spot with B of A by keeping in touch. "They had a calling effort with us," Masuda said. "They have talked to us a lot over the years." He added that Citigroup is dedicated to the homebuilder's market and has a good reputation in the field.
Cheap pricing prompted KB Home to enter a new credit facility. The pricing on the revolver, which matures in five years and replaces the homebuilder's existing revolver, is adjusted every quarter based on the company's credit ratings and leverage. The current spread on the revolver is LIBOR plus 87.5 basis points. The previous facility, which was scheduled to mature in 2007 and was based on a similar pricing grid, was priced at LIBOR plus 130 basis points at the time of closing.
There are 30 banks in the new facility, compared with 22 banks in the previous one. Lenders include Calyon, Citicorp North America, Wachovia Bank, The Royal Bank of Scotland and Barclays Bank.