Deere Sells $1.6 Billion of Bonds, Helping to Extend Maturities
Deere & Co. (DE), the largest maker of agricultural equipment, sold $1.6 billion of bonds in a three- part offering through its financing arm as it looks to refinance maturing debt.
Deere was joined by Comcast Corp. (CMCSA), American International Group Inc. and MetLife Inc. (MET)’s global funding affiliate, which are among other companies leading bond sales in the U.S. to about $8 billion today, after a shutdown of supply in the investment-grade market yesterday, according to data compiled by Bloomberg.
The tractor maker had about $13 billion of debt maturing by 2014 as of Dec. 31, Bloomberg data show. The Moline, Illinois- based company has pushed out the weighted average maturity date on its debt to June 2018 from October 2015 with nearly $5 billion of bond sales this year. That’s more than twice the amount sold for the same period in 2011.
“They had a lot of debt maturing in the next couple of years and should the market freeze like it did a few years ago, then it would be a problem,” Jody Lurie, a corporate credit analyst at Janney Montgomery Scott LLC, said in a telephone interview. “What better time to issue than when the market is offering such low rates.”
Deere spokesman Kenneth Golden did not immediately return calls to discuss the company’s bond sales.
John Deere Capital Corp. sold $500 million of 22-month floating-rate securities priced to yield 15 basis points more than the three-month London interbank offered rate, $600 million of 0.95 percent three-year debentures at 55 basis points more than similar-maturity Treasuries and $500 million of 2.8 percent 10.5-year bonds at a 120 basis-point spread, Bloomberg data show.
Deere’s $2 billion of 2.875 percent government-backed debt matured this month. The company had issued bonds through the Temporary Liquidity Guarantee Program put in place to stem the 2008 financial crisis.
Yields on investment-grade company bonds in the U.S. fell to 3.36 percent yesterday, approaching a record low 3.33 percent reached on May 8, Bank of America Merrill Lynch index data show.
Comcast, the largest U.S. cable company, sold $1 billion of 3.125 percent, 10-year notes at 150 basis points more than similar-maturity Treasuries and $1.25 billion of 4.65 percent, 30-year debt at 195 basis points more than benchmark securities. Comcast plans to redeem $575 million of its 6.625 percent senior notes maturing in May 2056, the Philadelphia-based television- services operator said in a June 22 statement.
Metropolitan Life Global Funding I sold $1 billion of 1.7 percent, three-year notes priced to yield 132 basis points more than benchmarks, Bloomberg data show. AIG sold an additional $750 million of its 4.875 percent notes maturing in June 2022.
“There was a pretty significant down draft in the market on Monday because of negative news coming from Europe” Marc Pinto, head of corporate bond strategy at Susquehanna International Group LLP said in a telephone interview. “Most companies have a fair amount of flexibility when they access the market and they could have decided to hold off or postpone the bond sale.”
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