The John Deere Owner Trust is preparing to issue at least $1.4 billion in notes to investors, backed by payments from a pool of loans payments on mostly agriculture and construction equipment.
The John Deere Owner Trust, 2024-C, could be upsized—like several recent deals—to $1.6 billion, according to Moody's Ratings. The deal will issue notes through five tranches, all class A notes, according to Moody's Ratings.
The notes have a range of legal final maturity dates—Sept. 15, 2025 on the A1 notes; Aug. 16, 2027 on the A2A and A2B notes; June 15, 2029 on the A3 notes; and Aug. 15, 2031 on the A4 notes. All the notes have hard credit enhancement totaling 3.5% of the pool balance, the rating agency said.
Credit enhancement consists largely of 2.5% in overcollateralization, and a reserve account representing 1% of the reserve account, Moody's said.
John Deere Capital originated the loans in the underlying pool, and will service them, according to Moody's. The pool consists of 16,272 contracts, with an average contract balance of $93,502. On a weighted average (WA) basis, the contracts have an original term of 55.7 months, and a WA remaining term of 45.5 months, the rating agency said. Also, on a WA basis, they have an average percentage rate of 4.8%, and a FICO score of 755. Just 23.4% of the loans don't have a FICO score.
A majority of the underlying contracts, 62.2%, have an annual payment frequency; while 31.7% of them pay on a monthly basis. Most of the equipment types, 57.6%, are new, Moody's said.
Overall, the portfolio has delinquency and loss rates that remain low and in line with historical performance, despite the slight increase in delinquency and loss rates in recent periods for John Deere Capital's originated pools. The rating agency also credits the transaction structure. Aside from the initial discounted pool balance and the cash reserve the servicing fee will be subordinated to payments on the notes and support their cash flow.
Moody's assigns P1 to the A1 notes; and Aaa to the A2 through A4 tranches.
