Agriculture industry

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.

Farmers were already taking on more debt to cover losses from falling crop prices. New tariffs and other retaliatory moves could hurt ag borrowers further and lead to loan losses and tighter underwriting.

Stabilizing farm incomes are expected to help boost the performance of the sponsor's managed portfolio, which experienced a rise in 2015-2017 delinquencies, as well, according to ratings agency reports.