New Focus On Debt At Deere

In a lengthy article, Bloomberg Businessweek, focused on Deere & Co. selling of more debt than at any time in its history, exploiting demand from investors who are charging unprecedented low interest rates. A $1 billion offering from Deere’s finance unit of three- and five-year notes at its lowest coupons brings its 2012 issuance to $7.35 billion, exceeding the total in any previous year, according to data compiled by Bloomberg.

Deere is boosting debt sales as it contends with slowing revenue in Asia and Latin America that threatens to undermine Chief Executive Officer Sam Allen’s goal of reaping at least half its revenue from outside the U.S. and Canada by 2018.

John Deere Capital, which issues obligations to help finance the sale of the parent company’s equipment, sold equal $500 million portions of 0.7% notes due in 2015 that yielded 42 basis points more than similar-maturity Treasuries and 1.2% bonds maturing in 2017 with a 62 basis-point spread, Bloomberg data shows. The coupons were the lowest ever among its similar-maturity fixed-rate bonds.

“Deere had significant debt maturities to refinance this year in addition to growth in the credit portfolio,” Ken Golden, a spokesman at Deere, said in an e-mail. Deere is ranked A2 by Moody’s Investors Service, its sixth-highest level, and an equivalent A by Standard & Poor’s.

The company has pushed out the length of its debt, with a $1.25 billion sale of 3.9 percent securities due in three decades helping to extend the average maturity of its obligations to 5.72 years, from 3.96 years in 2011.