Short-Term External Borrowings

12 Months Ended

Oct. 30, 2022

Short-Term External Borrowings

Short-Term External Borrowings

Note 8. Short-Term External Borrowings

Short-term external borrowings of the Company at October 30, 2022 and October 31, 2021 consisted of the following (in millions of dollars):

	2022		2021
Commercial paper and other notes payable	$	2,402.3	$	678.9
Securitization borrowings		5,710.9		4,595.2
Current maturities of long-term external borrowings *		5,989.6		5,819.1
Total	$	14,102.8	$	11,093.2

*            Includes unamortized fair value adjustments related to interest rate swaps.

The weighted-average interest rates on total short-term external borrowings, excluding current maturities of long-term external borrowings, at October 30, 2022 and October 31, 2021, were 3.1 percent and .8 percent, respectively.

Lines of credit available from U.S. and foreign banks were $8,089.2 million at October 30, 2022. Some of these credit lines are available to both the Company and Deere & Company. At October 30, 2022, $3,283.9 million of these worldwide lines of credit were unused. For the purpose of computing the unused credit lines, commercial paper and short-term bank borrowings of the Company and John Deere, excluding secured borrowings and the current portion of long-term external borrowings, were considered to constitute utilization. Included in the total credit lines at October 30, 2022 was a 364-day credit facility agreement of $3,000.0 million, expiring in the second quarter of 2023. In addition, total credit lines included long-term credit facility agreements of $2,500.0 million, expiring in the second quarter of 2026, and $2,500.0 million, expiring in the second quarter of 2027. The agreements are mutually extendable, and the annual facility fees are not significant. In October 2022, the Company amended these credit agreements with pricing adjustments tied to John Deere’s Leap Ambitions framework. Failure by John Deere to meet certain Scope 1 and 2 emissions targets or engaged acres goals will result in a maximum 6 basis-point penalty rate, while exceeding certain thresholds on the same metrics will result in a similar favorable rate adjustment.

These credit agreements require the Company to maintain its consolidated ratio of earnings to fixed charges at not less than 1.05 to 1 for each fiscal quarter and its ratio of senior debt to capital base (total subordinated debt and stockholder’s equity excluding accumulated other comprehensive income (loss)) at not more than 11 to 1 at the end of any fiscal quarter. “Senior debt” consists of the Company’s total interest-bearing obligations, excluding subordinated debt and securitization indebtedness, but including notes payable to John Deere. All of these credit agreement requirements have been met during the periods included in the consolidated financial statements. The facility fees on these lines of credit are divided between Deere & Company and the Company based on the proportion of their respective forecasted liquidity requirements.

Deere & Company has an agreement with Capital Corporation pursuant to which it has agreed to continue to own, directly or through one or more wholly-owned subsidiaries, at least 51 percent of the voting shares of capital stock of Capital Corporation and to maintain the Company’s consolidated tangible net worth at not less than $50.0 million. This agreement also obligates Deere & Company to make payments to Capital Corporation such that its consolidated ratio of earnings to fixed charges is not less than 1.05 to 1 for each fiscal quarter. Deere & Company’s obligations to make payments to Capital Corporation under the agreement are independent of whether the Company is in default on its indebtedness, obligations, or other liabilities. Further, Deere & Company’s obligations under the agreement are not measured by the amount of the Company’s indebtedness, obligations, or other liabilities. Deere & Company’s obligations to make payments under this agreement are expressly stated not to be a guarantee of any specific indebtedness, obligation, or liability of the Company and are enforceable only by or in the name of Capital Corporation. No payments were required under this agreement during the periods included in the consolidated financial statements. At October 30, 2022, Deere & Company indirectly owned 100 percent of the voting shares of Capital Corporation’s capital stock and Capital Corporation’s consolidated tangible net worth was $4,803.4 million.