Agriculture industry

Total hard credit enhancement will represent 4.5% of the note balance, and initial reserves amounting to 2.0% of the pool.

Total delinquencies as a percentage of John Deere's managed portfolio was 3.06%, an increase since 2022. That aligns with the decline in corn and soy prices in the same period.

The current pool has smaller exposures to the construction and turf sectors compared to the 2024-2 series, which have seen higher loss rates than the agriculture sector.

The securitization has a reserve account of 1% of the initial series note balance funded fully at closing.

The global pandemic and stalled trade negotiations have discouraged farmers and ranchers from taking on more debt and made banks uneasy about extending more credit.

According to ratings agency presale reports, the small-compact tractor manufacturer is boosting overcollaterization to $22 million and a reserve account to 1% of the initial pool balance.

Even with the global-trade wars’ ongoing financial pressure on the U.S. agricultural industry, John Deere Capital Corp. has yet to see serious signs of distress from borrowers who’ve financed farm equipment through the Deere & Co. lending unit.

Lawmakers have also criticized the agency's decision to create qualifying standards for farmers and other small businesses.

To guard against headwinds in the agricultural sector, the Federal Deposit Insurance Corp. recommended that institutions consider the “overall financial status” of farm loan borrowers.

So far farm loans are holding up well, but bankers gathered at an industry conference this week said they are growing increasingly concerned that credit quality will weaken if the U.S. and China don’t reach a deal soon.