Toll (TOL)
$250m (37.5m) sen unsec cb coming tonight from DB/Citi. Terms: 20 yr, 0.25-0.75% up 47.5-52.5%, 5.25/5yr put/call, full pctn. UOOP = gcp. Stk +148% since 10/11 low but still 44% off heady housing market of 2005. CDOs may need to make comeback w/lax lending standards before u see this ITM. LEN/DHI cheaper vs listeds but too ITM for o/r’s SPF/RYL more comparable with 109/113 $px. SPF came 0.25% up 42.5% in 07/12 and RYL 1.625% up 42.5% in 05/12, both lower rated (Fitch BBB- on TOL). We’ll use L+150 (not adding –ve basis) & 30 vol (2 yr 90 day 10/50 ile = 24/37. Listed atm 40 iv but high strikes low 30s. Theo = 102.2 May go in IG index, allows o/r’s to add a balanced, better rated housing name. Not gonna blow the roof off Push for mids.