Deere & Co. is selling more debt than at any time in its history, exploiting demand from investors who are charging unprecedented low interest rates even as the world’s largest maker of farm equipment said it won’t be as profitable as forecast.
A $1 billion offering yesterday from Deere’s finance unit of three- and five-year notes at its lowest coupons brings its 2012 issuance to $7.35 billion, exceeding the total in any previous year, according to data compiled by Bloomberg. Average yields on the company’s bonds fell even after Deere said net income in the year ending Oct. 31 will be $250 million less than a May estimate.
Demand for corporate bonds is rising as investors seek the extra yield offered by company debt relative to the declining rates on government securities. That’s helped push borrowing costs on U.S. investment-grade bonds to a record low 2.98 percent as of Aug. 31, Bank of America Merrill Lynch index data show.
The company has pushed out the length of its debt, with a $1.25 billion sale of 3.9 percent securities due in three decades helping to extend the average maturity of its obligations to 5.72 years, from 3.96 years in 2011.