Home builders, locked out of access to debt for the past few years, are starting to crack the code to the safe.

Late April 23, Lennar announced it had sold $400 million worth of senior notes, following fast on the heels of an announcement earlier in the week that it was beefing up its shelf supply of stock by $275 million. Shares of Lennar (NYSE:LEN) ended the session Friday up nearly 15% to $9.97 on exceedingly heavy volume. Fitch promptly slapped a "BB+" rating on the offering.

Toll Brothers, too, further liquefied itself early this week, selling $400 million in bonds. At the time, Toll's CFO Joel Rassman said he thought the deal could signal a return of available capital to the market for borrowers with good balance sheets.

"The markets have primarily been closed to our industry for three years," said Joel Rassman at the time, "particularly since Lehman [Brothers] in September."

Of course, both Toll, with roughly $1.5 billion in cash, and Lennar, with $1 billion, have enough cash on hand for investors to consider the risk of a debt offering to be more acceptable.

"We don't look to access capital markets when you need money, but when we don't," said Rassman.

Both could use the funds to pay off existing debt coming due in the next couple of years with debt with a longer maturity rate. Lennar also said it could use the proceeds to pay off joint-venture obligations.

Pali Capital analyst Stephen East pointed out in a Friday morning note that Lennar's bond sale could provide more than enough cash to service nearly two-thirds of debt maturities due in 2009 and 2010.

"When one works through all the expected cash needs from debt maturities, JV cash outlays and land spend, we believe LEN is now in excellent shape to not only survive, but thrive," East wrote. "We see a potential maximum cash balance by the end of 2010 growing to $2.8 billion.

Rassman also said Toll could use its bond offering proceeds to pay off debt due in 2011, essentially replacing it for new debt that won't come due until 2017, when, hopefully, the housing market will be well into a recovery.

The new debt does come with a higher cost than the old debt. For Toll, with its superior cash position relative ot its size, the difference is slight, 8.91% for the new bonds versus 8.25% for the old. Lennar's new bonds carry a much higher coupon rate, 12.25%

In addition to paying off debt, the new liquidity also makes both builders more desirable as an acquisition target or apt as a potential acquirer. In the wake of the announcement of Pulte Homes' planned purchase of Centex, speculation has been rampant about what other mergers or acquisitions could be in the offing. Both Lennar and Toll have been included in those speculative discussions.