Hovnanian Enterprises (NYSE:HOV) Monday announced a private placement offer to swap existing Senior Notes for longer-term secured notes paying 18%.

Hovnanian said it would exchange existing Senior Notes with interest rates ranging from 6.25% to 8 5/8% and maturing between 2012 and 2017 for new 18.0% Senior Secured Notes due 2017 to be guaranteed by the company and substantially all of its subsidiaries.

Home building analyst Ivy Zelman of Zelman & Associates took a positive view of the debt offering, noting that it would increase the book value of the company's stock by about a third and reduce its debt-to-capital ratio from an estimated 72% to 63% in the first fiscal quarter of 2009.

"We believe this proposed debt exchange, which expires on November 24, would be a positive for equity holders since it would allow the company to reduce total debt outstanding, and subsequently increase equity, by roughly $375 million without a material cash impact on the income statement," Zelman wrote in a research note. "It would also extend the maturity date for approximately 40% of its outstanding senior notes, assuming a full exchange."