Capital market.

The asset-backed securities (ABS) programme, under which European and US trade receivables are sold to a special purpose entity that refinances itself on the capital markets, plays a key role in reducing the external cash requirements that arise from the seasonal nature of the agricultural machinery business. Traditionally, customers order harvesting machinery between October and March, with payments due at the end of August, when the harvest has been brought in and sold. This results in a need for finance during the year, while high levels of liquidity build up at the end of the financial year, when relatively little capital is tied up in working capital. Since 2000, the ABS programmes have helped CLAAS to effectively manage these fluctuations in its cash position.

In January 2020, CLAAS returned to the German private placement (Schuldscheindarlehen) market with a transaction for a total of €250 million. The placement was again significantly oversubscribed, confirming the strong investor interest in the transaction.

The proceeds of this transaction were used for general corporate financing as well as to refinance the 2015 German private placement that matured in August 2020.

Approximately 70 domestic and international institutional investors participated in the transaction. Of the four tranches with maturities in 2027 and 2029, one has a variable coupon and three have fixed rate coupons. The credit margins were set at the lower end of the marketing range, with coupons of 0.60% to 0.75% per annum.

In addition to traditional marketing via the distribution channels of the participating banks, the transaction was also marketed via the DEBTVISION digital platform.

As part of the issue, CLAAS also offered a forward tranche, where a binding contract is entered into but the tranche is not paid out until a later date. This gave existing investors an early reinvestment option on outstanding private placements from 2015 while optimising CLAAS’ interest expense until the maturity of the previous transaction. This option was very well received by the market. The 6-month forward period of the CLAAS transaction was the longest forward period ever placed in the German private placement market without an interest rate premium.

In 2023, CLAAS successfully placed another German private placement transaction (Schuldscheindarlehen) with a volume of €350 million. The transaction was placed with terms of 3.25, 5.25 and 7.25 years and with fixed and variable rate coupons.

Due to very strong demand, the company decided to increase the size of the transaction to €350 million, successfully setting the credit spreads of all tranches at the tight end of the marketing ranges. The final order books were several times oversubscribed.

The transaction attracted a high quality German and international investor base, with ticket sizes ranging from €1 million to €50 million being allocated to approximately 100 investors. CLAAS again used the SSD format to raise new capital and benefited from access to a broad mix of new investors, including German and international commercial banks, savings banks and cooperative banks.

One of the first instruments actively used by CLAAS in the international capital markets was a syndicated credit facility (SynLoan) in 1997. This first facility had a volume of DM200 million and was subsequently extended and expanded several times over the years.

In September 2023, CLAAS renewed the syndicated credit facility with a consortium of ten international commercial banks. The volume was increased to €850 million and the term was extended to September 2028 (with two one-year extension options). In March 2024, a further commercial bank joined the syndicate, increasing the volume of the facility to €935 million. The term has meanwhile been extended to 2029 by exercising an extension option.

Under the SynLoan facility, a consortium of banks provides the company with a credit line at defined terms. The facility is an important component of the CLAAS financing strategy and serves to flexibly cover the company’s liquidity requirements in the medium term.