Pulte Homes has increased its credit line, including up to $500 million of letters of credit issuing capability. The new $850 million credit also includes an accordion feature that will allow the company to increase the revolver to $1 billion, noted Roger Cregg, Pulte's executive v.p. and cfo. The company wanted to include the letters of credit in this facility to ensure the availability of that financing instrument as the environment for letters of credit in the home-building industry gets tougher. The company is also able to offer business to its bank group, which will receive fees for issuing letters of credit as a result, said Cregg.
Bank One took over the lead position on the new $850 million credit from Bank of America. Bank One had been involved in the former facility as well. Cregg did not comment on a specific reason for the change in leads. B of A chose not to participate in the new line, but Cregg noted that B of A does participate on Pulte's mortgage facility.
Pulte Homes had a $570 million, five-year credit in place that did not include the letters of credit basket. The company decided to refinance the deal early. "The market was right to do another five-year deal," Cregg said. The former credit also had an accordion feature, allowing the company to tap an additional $30 million. Pricing under the new facility is slightly better than it had been previously, but Cregg declined to provide specific spreads.