John Deere reaps the reward for taking on challenging market

John Deere Financial elected to plough ahead with its Australian market return despite renewed geopolitical turmoil in mid-June. Brand recognition, scarcity value and ongoing demand provided endorsement for this decision, allowing the issuer to record tight pricing and substantial oversubscription.

Sophie He  Senior Staff Writer KANGANEWS

Source: Deutsche Bank 26 June 2025

Source: Deutsche Bank 26 June 2025

John Deere deal details

Issuer: John Deere Financial
Issuer rating: A/A1/A+
Pricing date: 25 June 2025
Maturity dates: 21 June 2030
Format: senior-unsecured bond
Volume: A$300 million (US$196 million)
Book volume at pricing: “more than A$1.3 billion”
Margin: 110bp/s-q swap
Indicative margin: 125bp/s-q swap
Number of investors: more than 60
Geographic distribution: see chart 1
Distribution by investor type: see chart 2
Lead managers: Deutsche Bank, RBC Capital Markets

“The transaction saw demand from some accounts that don’t typically participate in Australian dollar corporate deals, and it also offered diversification even for local portfolios. The breadth of the book showed how much latent demand there is for scarce corporate supply.”

CRAIG JOHNSTON HEAD OF AUSTRALIAN SYNDICATE DEUTSCHE BANK

“The deal followed a familiar tightening pattern, from 125 to 110 basis points over swap. There was little attrition through the process and some new accounts even joined late.”

“The issuer prioritised securing a diverse book over pushing for the tightest possible print. Even so, the deal priced flat to slightly through fair value relative to John Deere’s local curve. It came at a modest premium to the issuer’s US dollar paper.”

“It has tightened a couple of basis points in secondary since launch, which is a strong early signal. The deal was very well placed and there has been no sign of selling pressure.”

“Despite geopolitical developments around the time of launch and throughout the process, investor demand held up. Technicals and issuer scarcity supported the outcome. We didn’t change strategy but closely monitored developments and the market remained constructive.”

“From the initial 125 basis points, we saw minimal attrition as the deal priced at 110. Very few accounts dropped out – perhaps even fewer than expected – and no large orders fell away. This level of consistency speaks to the strength of demand.”

HARALD EIKELAND DIRECTOR, DEBT CAPITAL MARKETS RBC CAPITAL MARKETS

“We announced the mandate the previous week but waited until Tuesday [10 June] to go live with IOIs, deliberately skipping Monday. This gave us a session to observe offshore sentiment. Monday proved constructive in Europe and the US, which gave us the confidence to proceed.”

“It’s early days, but there has been very little, if any, selling since pricing. With A$1.3 billion of demand for a A$300 million deal, there simply weren’t many loose bonds. It’s trading tighter than reoffer on an asset swap basis, which is a strong early signal.”

“This deal reflects the appetite among Australian investors for diversity. They like a broad range of credits, even from familiar names. The success here shows how much demand there is for variety in the issuer base.”