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John Deere Capital Corporation

As a captive finance unit of Deere & Co, JDCC's primary activity is retail and lease financing for customers and wholesale inventory financing for dealers. Revenue generating assets include net receivables at 81% of total assets and operating leases at 13% at fiscal year-end October 31, 2017. In 2017, 2016 and 2015, at least 90% of receivables and leases on JDCC's books involved financing for Deere products. JDCC contrasts with Caterpillar Financial in that JDCC has a domestic focus with the US geographic segment accounting for 87% of receivables and leases along with and 82% of 2017 segment profits. (21 Jun 2018)

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Focused

Deere: 4Q18 | Cautiously Optimistic

IG Note: 23 Nov 2018, 10:28 PM ET - Although there is indeed uncertainty to navigate in the agriculture markets, by and large fundamentals remain intact and construction is offering a solid boast to overall demand.
Focused

John Deere Capital: Buy New Issue

IG Note: 05 Sep 2018, 9:25 AM ET - JDCC is tapping the market this morning with 3Y fixed and FRNs as well as a tap of its 3.45% 2025’s. We are at a market perform due to spread tightness but see a ~20 bp concession as an opportunity for investors to increase exposure.

Deere: 3Q18 | Still Seeing Green

Earnings Note: 19 Aug 2018, 8:09 PM ET - Results in the firm’s Ag & Turf division were impacted by freight and materials costs once again, but fundamentally demand remains healthy even going into early 2019. We maintain our Market perform on the credit.

Industrials 2Q18 Review: Tariffs Tame for Now

Sector Analysis: 07 Aug 2018, 4:43 AM ET - It was a strong 2Q18 earnings season for our Industrial credits. We share the salient takeaways and touch on hot button topics such as end-market trends, tariffs and event risk.

US Industrials: Macro Data Points

Sector Analysis: 12 Jun 2018, 1:59 AM ET - In this report, we tied the positive tone from Industrial management teams to select economic data points.
Focused

John Deere Capital: Attractive Issuance Concession

IG Note: 04 Jun 2018, 10:37 AM ET - John Deere Capital is tapping the markets this morning with a 5Y  fixed and FRNs.  We are market perform due to spread tightness but see ~27 bp concession as an opportunity for investors to increase exposure.

US Industrials: EPG Conference | Macro to Micro

Sector Analysis: 29 May 2018, 4:47 AM ET - We attended the 3-day Electrical Products Group conference in FL last week, which featured a host of Industrial firms. The macro and end-market tone was distinctly positive.  In this report we highlight key takeaways on over 15 credits.
Focused

Deere: 2Q18 | Construction Boost

Earnings Note: 20 May 2018, 8:05 PM ET - Results in the firm’s Ag & Turf division were impacted by freight and materials costs, but fundamentally demand remains healthy while the Construction & Forestry segment boosted results. We maintain our Market perform on the credit.

Parker: 3Q18 | Shifting to Market perform

Earnings Note: 26 Apr 2018, 9:13 PM ET - PH’s earnings were strong, but with the equity now under pressure and debt reduction plans nearing completion we anticipate a capital allocation change soon. We take our Outperform on the credit to a Market perform.

US Cap Goods: Event Risk = Sector Underperformance

IG Note: 21 Mar 2018, 5:23 AM ET - The Capital Goods Index has been the worst performing sector on an excess return basis year-to-date. Sector returns severely lagged the Index in January with GE and UTX being notable underperformers to date.
Focused

John Deere Capital: Attractive Issuance Concession

IG Note: 08 Mar 2018, 10:04 AM ET - John Deere Capital is tapping the markets this morning with 3Y fixed and FRN  as well as a 7Y fixed offering. We are market perform due to spread tightness but see +20 bp concession as an opportunity for investors to increase exposure.

US Strategy: Tariffs as Repricing Event?

Strategy Analysis: 01 Mar 2018, 9:40 PM ET - The market has been building in very low odds of a trade war event, a NAFTA withdrawal, or a significant escalation of tit-for-tat trade retaliations on a broader scale.  The odds-makers just got a fresh load of input.

Section 232: The NAFTA Conundrum

Sector Analysis: 26 Feb 2018, 3:42 AM ET - Using Section 232 on Steel/Aluminum could damage supplier chains and cost structures and drive broader inflation.  A tariff gambit in such key industries could undermine the NAFTA negotiations and have immediate effects on risk pricing. 

Deere: 1Q18 | Building Momentum

Earnings Note: 18 Feb 2018, 6:55 PM ET - Fiscal 1Q18 results came in lower than expected, but end-market commentary was positive and full-year guidance was strong. Balance sheet optics also remain solid, even post Wirtgen, and we maintain our market perform on the credit.

CNHI 4Q17: Supportive Positive Trends

Earnings Note: 31 Jan 2018, 9:11 AM ET - CNHI reported results highlighting positive trends in end-market demand which contributed to better operating performance. Credit metrics continue to strengthen at the Capital Goods bellwether and we maintain our O/P on CNHI bonds.

US Industrial 2018 Outlook: Conglomerate Conundrum

Sector Analysis: 21 Jan 2018, 9:58 PM ET - Against the backdrop of a generally favorable global demand environment, event risk is the key 2018 credit concern for the conglomerate peer group. We focus on this topic and revisit our credit recommendations for more than two dozen firms.
Focused

John Deere Capital: Multi-tranche Offering

Worth Watching: 03 Jan 2018, 10:35 AM ET - John Deere Capital (A2/A), the captive finance arm and main issuing entity in the Deere family, is ringing in the New Year with its inaugural 2018 debt issuance. JDCC is in the markets this morning with 3Y fixed and floating paper, as well as 5 ..

Deere: 4Q17 | Favorable 2018 Ahead

Earnings Note: 22 Nov 2017, 6:46 PM ET - Deere’s performance was lifted by improving farm and construction equipment demand. Looking to 2018, retail sales for Ag & Turf are to be flat to up and even after the Wirtgen closes Deere will maintain a strong balance profile.

CNH Industrial: Issuing New 10Y US$ Bonds

Worth Watching: 09 Nov 2017, 1:23 PM ET - CNH Industrial is issuing new 10-year US dollar bonds out of the CNH Industrial N.V. (parent) entity. CNH Industrial has one other US$ bond outstanding at the parent level, the 4.5% 8/2023 bond (Ba2/BBB -/BBB-), which trades at a spread of G+12 ..

Caterpillar: 3Q17 | Knocks the Cover off the Ball

Earnings Note: 24 Oct 2017, 8:11 PM ET - Caterpillar’s earning trajectory has been on a favorable trend line in 2017 and the trend continued into the third quarter with a set of strong results. The quarter did not change our view of the credit and we remain at a Market perform.

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