Rush to Sell John Deere Construction Equipment Unit

My San Antonio

 

 

Rush Enterprises Inc. said Friday it had agreed to sell its John Deere construction equipment business to Doggett Heavy Machinery Services for about $37 million.

That construction equipment division comprised about 5 percent of Rush’s business, and the company had not succeeded in expanding it with other purchases to desired levels, said W.M. “Rusty” Rush, the New Braunfels-based company’s president and CEO.

Rush owns the largest network of truck and commercial vehicle dealerships in the country.

It acquired the John Deere construction equipment outlet in Houston more than 12 years ago. Rush Equipment centers in Houston and Beaumont will be sold as part of the deal announced Friday. Rusty Rush said both are expected to remain open under the Doggett name.

Officials at Doggett could not be reached for comment. Its website said it is one of the newest John Deere dealerships in North America with four locations in South Texas. Rusty Rush said Doggett also serves customers in Louisiana.He said Rush is prohibited from re-entering the construction equipment market in Southeast Texas for several years but looks forward to re-entering the segment with another equipment manufacturer or in another area.

Rush also said the company is working on expanding an 11-unit truck dealership it acquired earlier this year from Lake City Cos. LLC. That gave the company outlets in Utah, Idaho and Oregon.

John Deere Opens Factory in $500M Russian Initiative

The Moscow Times

 

 

U.S.-based tractor maker John Deere opened a factory in Domodedovo on Tuesday, in the first step of its plan to invest $500 million in the country.

John Deere is betting that Russia, with a rapidly growing supply of cultivated land, will become a key market for its agricultural equipment and other capital goods. Much of that land has lain fallow, however, since the fall of the Soviet Union left many farmers unable to develop the land.

Russia will be able to bring an additional 20 million to 30 million hectares back into production in the coming years. The country "has potential to become one of the world's breadbaskets," said CEO Samuel Allen, who recited a famous Russian poem.

"Russia cannot be understood by the mind alone. … In Russia one can only believe," Allen said, quoting poet Fyodor Tyutchev, in an opening ceremony that featured a tractor rolling out in a dramatic fog and light show.

The Domodedovo site will include production lines, where it will build tractors and combines to start with, and a parts distribution center for regional operations, the company said.

John Deere will assemble tractors and other agricultural, forestry and John Deere construction equipment from imported knockdown kits, but will increase its level of localization by doing welding, metal fabrication and cab assembly on-site once demand picks up, Allen said. "Once volume goes back to 2008 levels, then localization will happen," he said, adding that he does not expect low demand for John Deere stuff to last for many years.

"We would like to do more manufacturing here, as long as it's cost effective," Allen said. Once volume increases and production is further localized, John Deere will look into exporting from Russia to other countries in the Commonwealth of Independent States, he said.

Although he declined to provide any production figures, Allen said the company already has orders for tractors and combines this year, and plans to assemble motor graders, four-wheel drive loaders, back hoe loaders, as well as forestry equipment on its Domodedovo lines within 12 to 24 months.

John Deere is the first tenant at South Gates, a 575,000-square-meter warehouse facility developed by Canada's Giffels. Giffels is leasing 47,000 square meters of the 76,550 square meters already available on a long-term basis, or at least five years, said vice president Ruslan Suvorov, who declined to give any other details of the deal.

Giffels bought land in 2006 from Coalco, which has stayed on as a partner and is currently building a railroad track to the complex, Coalco said in a press release.

Deere's Harvest

TIME

At Deere & Co., It hasn't been so easy being green lately. 

 

 

Since the Great Recession began in December 2007, Deere, the world's largest maker of farm equipment and a major builder of John Deere construction equipment, has watched earnings plummet by half. Construction sales worldwide fell by 45% last year alone, and agricultural sales sank more than 15%.

It is no small feat, then, that Deere earned $873 million in 2009 on sales of $23 billion. That's because the iconic manufacturer today is more focused on making profits than on just making tractors. Indeed, over the past decade, the firm's production capabilities have become leaner, smarter and faster as it has eliminated waste, pushed innovation and expanded its global footprint. "Deere's competitive advantage has always been a superior product and tremendous brand loyalty," says Morgan Joseph & Co. analyst Charles Rentschler. "But it performed better this down cycle than ever before because of the tight cost controls and excellent execution it already had in place."

Deere, of course, operates in two of the most cyclic industries around. The $87 billion agribusiness sector, dependent on commodity prices, is about as predictable as the weather. Still, Deere can count on the fact that people need to eat. Growing populations and incomes in places like China and India mean food output must increase. Indeed, it could double by 2050; globally, farmers have planted more corn, soybeans, rice and wheat for two straight years.

Construction remains troubled. Volumes shrank as much as 80% during the downturn's lowest point, about as much as in the Great Depression. Still, housing starts showed some signs of life in January, and after such a protracted drop, the $30 billion construction-machinery business can "expect a bounce as people simply need to replace equipment again," says Morgan Stanley analyst Robert Wertheimer. "So we do think there is a recovery at hand, though it could be in 2011, not 2010."

John Deere is a brand about as American as apple pie. It's headquartered in Moline, Ill., not far from where it started in 1837 as a one-man blacksmith shop making steel plows for sod-busting pioneers. Under John's son Charles, who served as CEO for 49 years, the modern Deere emerged, a network of factories and dealers supplying tractors, wagons and combines to farms nationwide. It expanded to Mexico and Europe in the 1950s, complete with construction products and then credit operations.

Yet Deere's strong performance in the most recent downturn is hitched to CEO Bob Lane, who stepped down in June. Lane diligently cut costs, pared unprofitable businesses and inventories. He also added a novel profit driver: a capital charge of about 1% a month that managers must "pay" before they can report any gain internally — in other words, 12% annual profit before break-even. During Lane's tenure, Deere saw record earnings, soaring free cash flow and a quintupling of its stock price.

When the housing bubble burst, a streamlined Deere was ready. Despite collapsing sales, it was able, for instance, to avoid major staff reductions — most of the 1,500 workers Deere laid off or furloughed are already back on the job — while maintaining enviable margins of nearly 10%. "Deere was ahead of the curve when it came to cost controls and data collection, so as soon as demand started to drop, it could shut down production and keep inventories low," says Alex Blanton, an analyst at Ingalls & Snyder. "That also means there will be little lag time in its recovery."

That recovery will be driven by the John Deere farm equipment unit, which still comprises 90% of its sales. Even here, Deere's gotten tough, canceling franchise contracts with smaller dealers — who, like the farmers, are deeply brand-loyal — encouraging them to partner with higher-volume dealership chains. "Our customers now have to drive more than an hour to get parts," says Roy Dufault, whose family-run franchise in Fosston, Minn., closed in October after 80 years of selling John Deere clothing, toys and other products. "At harvest time, if a tractor breaks down, an hour means a lot of money lost."

In reality, Deere is following its customers. For decades, smaller U.S. farms have been replaced by industrial, or factory, operations. It's not the storybook farm, but it's more efficient. "The amount of money a dealer has to invest to train its technicians or buy diagnostic tools continues to grow," says Deere CEO Samuel Allen, a company lifer. "So to be a great dealer requires making more money and that's gotten harder for smaller operations."

Another factor in Deere's shrinking U.S. presence is that its biggest opportunities will be overseas: 60% of its current business is in North America, 40% in the rest of the world. Allen knows that ratio will change drastically. "Emerging markets hold the most potential," Buckingham Research Group analyst Joel Tiss says. "It makes no sense to open a new dealership in Dubuque, Iowa, anymore when they could put it in Santiago, Chile, where they can do 10 times the volume." Sales in South America are expected to rise as much as 15% in 2010.

Likewise, Russia and Eastern Europe offer potential. Russia has arable land and is in need of a new fleet of farm equipment, and the government has put a priority on being self-sufficient in food and agriculture. The recession has made financing hard to come by in the region, but "Deere is planting the seeds for when the markets normalize," says Lawrence De Maria, an analyst at the New York brokerage firm Sterne Agee. Still, De Maria adds, "it's sticking with assembly factories for now so that if they had to pick up and leave, it wouldn't kill the shareholders."

Asia is a tougher row to hoe. The company opened a factory in Pune, India, in 2001 and has several operations and joint ventures in China. But the Indian tractor maker Mahindra & Mahindra has also begun selling its wares — less sophisticated but cheaper — in the U.S. "If Deere is making the Lexus or Mercedes of farm equipment, Mahindra is making Hyundai quality," Tiss says.

There are other challenges too. Deere has had to pump billions of dollars into engine technology to meet changing U.S. emission standards coming in 2011 and again in 2014 — costs it will pass on to customers through higher prices. "The 2011 product will go up several thousand dollars in price," Longbow Research analyst Eli Lustgarten says. "So when prices go up again just three years later, even the most price-inelastic customers will feel it."

Questions also persist about whether Deere should remain in the low-margin lawn-mower business and whether it should shed its construction unit. Allen downplays such concerns. "All of our divisions must meet a sustainable level of business," he says. "We're happy where construction is now."

Farmers today are even happier, since they now ride the most sophisticated John Deere ag equipment ever made. "Onboard GPS, leather seats, CD players — farmers fall in love when they walk into a Deere showroom," Rentschler says. "It's hard to resist buying the green."

Deere's Harvest

TIME

 

At Deere & Co., It hasn't been so easy being green lately. Since the Great Recession began in December 2007, Deere, the world's largest maker of farm equipment and a major builder of construction machinery, has watched earnings plummet by half. Construction sales worldwide fell by 45% last year alone, and agricultural sales sank more than 15%.

It is no small feat, then, that Deere earned $873 million in 2009 on sales of $23 billion. That's because the iconic manufacturer today is more focused on making profits than on just making tractors. Indeed, over the past decade, the firm's production capabilities have become leaner, smarter and faster as it has eliminated waste, pushed innovation and expanded its global footprint. "Deere's competitive advantage has always been a superior product and tremendous brand loyalty," says Morgan Joseph & Co. analyst Charles Rentschler. "But it performed better this down cycle than ever before because of the tight cost controls and excellent execution it already had in place."

Deere, of course, operates in two of the most cyclic industries around. The $87 billion agribusiness sector, dependent on commodity prices, is about as predictable as the weather. Still, Deere can count on the fact that people need to eat. Growing populations and incomes in places like China and India mean food output must increase. Indeed, it could double by 2050; globally, farmers have planted more corn, soybeans, rice and wheat for two straight years.

Construction remains troubled. Volumes shrank as much as 80% during the downturn's lowest point, about as much as in the Great Depression. Still, housing starts showed some signs of life in January, and after such a protracted drop, the $30 billion construction-machinery business can "expect a bounce as people simply need to replace equipment again," says Morgan Stanley analyst Robert Wertheimer. "So we do think there is a recovery at hand, though it could be in 2011, not 2010."

John Deere is a brand about as American as apple pie. It's headquartered in Moline, Ill., not far from where it started in 1837 as a one-man blacksmith shop making steel plows for sod-busting pioneers. Under John's son Charles, who served as CEO for 49 years, the modern Deere emerged, a network of factories and dealers supplying tractors, wagons and combines to farms nationwide. It expanded to Mexico and Europe in the 1950s, complete with construction products and then credit operations.

Yet Deere's strong performance in the most recent downturn is hitched to CEO Bob Lane, who stepped down in June. Lane diligently cut costs, pared unprofitable businesses and inventories. He also added a novel profit driver: a capital charge of about 1% a month that managers must "pay" before they can report any gain internally — in other words, 12% annual profit before break-even. During Lane's tenure, Deere saw record earnings, soaring free cash flow and a quintupling of its stock price.

When the housing bubble burst, a streamlined Deere was ready. Despite collapsing sales, it was able, for instance, to avoid major staff reductions — most of the 1,500 workers Deere laid off or furloughed are already back on the job — while maintaining enviable margins of nearly 10%. "Deere was ahead of the curve when it came to cost controls and data collection, so as soon as demand started to drop, it could shut down production and keep inventories low," says Alex Blanton, an analyst at Ingalls & Snyder. "That also means there will be little lag time in its recovery."

That recovery will be driven by the Deere Ag equipment unit, which still comprises 90% of its sales. Even here, Deere's gotten tough, canceling franchise contracts with smaller dealers — who, like the farmers, are deeply brand-loyal — encouraging them to partner with higher-volume dealership chains. "Our customers now have to drive more than an hour to get parts," says Roy Dufault, whose family-run franchise in Fosston, Minn., closed in October after 80 years of selling John Deere products. "At harvest time, if a tractor breaks down, an hour means a lot of money lost."

In reality, Deere is following its customers. For decades, smaller U.S. farms have been replaced by industrial, or factory, operations. It's not the storybook farm, but it's more efficient. "The amount of money a dealer has to invest to train its technicians or buy diagnostic tools continues to grow," says Deere CEO Samuel Allen, a company lifer. "So to be a great dealer requires making more money and that's gotten harder for smaller operations."

Another factor in Deere's shrinking U.S. presence is that its biggest opportunities will be overseas: 60% of its current business is in North America, 40% in the rest of the world. Allen knows that ratio will change drastically. "Emerging markets hold the most potential," Buckingham Research Group analyst Joel Tiss says. "It makes no sense to open a new dealership in Dubuque, Iowa, anymore when they could put it in Santiago, Chile, where they can do 10 times the volume." Sales in South America are expected to rise as much as 15% in 2010.

Likewise, Russia and Eastern Europe offer potential. Russia has arable land and an aging Soviet fleet of farm equipment, and the government has put a priority on being self-sufficient in food and agriculture. The recession has made financing hard to come by in the region, but "Deere is planting the seeds for when the markets normalize," says Lawrence De Maria, an analyst at the New York brokerage firm Sterne Agee. Still, De Maria adds, "it's sticking with assembly factories for now so that if they had to pick up and leave, it wouldn't kill the shareholders."

Asia is a tougher row to hoe. The company opened a factory in Pune, India, in 2001 and has several operations and joint ventures in China. But the Indian tractor maker Mahindra & Mahindra has also begun selling its wares — less sophisticated but cheaper — in the U.S. "If Deere is making the Lexus or Mercedes of farm equipment, Mahindra is making Hyundai quality," Tiss says.

There are other challenges too. Deere has had to pump billions of dollars into engine technology to meet changing U.S. emission standards coming in 2011 and again in 2014 — costs it will pass on to customers through higher prices. "The 2011 product will go up several thousand dollars in price," Longbow Research analyst Eli Lustgarten says. "So when prices go up again just three years later, even the most price-inelastic customers will feel it."

Questions also persist about whether Deere should remain in the low-margin lawn-mower business and whether it should shed its John Deere construction equipment unit. Allen downplays such concerns. "All of our divisions must meet a sustainable level of business," he says. "We're happy where construction is now."

Farmers today are even happier, since they now ride the most sophisticated stuff ever made. "Onboard GPS, leather seats, CD players — farmers fall in love when they walk into a Deere showroom," Rentschler says. "It's hard to resist buying the green."

New Watchword For Multinationals: Polycentric Innovation

Wall Street Journal

What do John Deere, Cisco, and Obopay have in common? All three companies form a new breed of enlightened Western firms that have embraced what I call "polycentric innovation."

Polycentric innovation is an emerging business practice that consists of networking international talent, capital, and ideas to meet global demand for new products and services. Wait, isn't that what multinationals have been doing for decades? Not really. While it's true that leading American and European MNCs (I won't name any here for fear of embarrassing them) have been operating R&D centers in emerging markets like India and China for years, these regional R&D centers merely adapted existing technologies and products developed in the West for distribution in local markets.

While some MNCs do conduct original research in emerging markets, the products and services produced by their bright Indian and Chinese engineers and scientists have again been primarily geared for local market consumption only. As such most MNCs' R&D centers in emerging markets like India and China have traditionally had a narrow mandate or were not tightly integrated with the firms' global innovation network, whose center of gravity was solidly anchored in New York or London.

But John Deere, Cisco, and Obopay are turning this ethnocentric 20th century R&D model on its head by de-Westernizing their business model and shifting the epicenter of their global innovation network well beyond the borders of USA and European Union. And they are using India as the launch pad for their "polycentric" innovation approach.

Take John Deere. It has developed low-cost, high-value products—like the 5003 tractor series and John Deere construction equipment —entirely inspired by the frugal Indian market. For instance, after serving the cost-conscious Indian farmers, John Deere ag equipment designed for the Indian market is finding increasing demand in Western markets, including among farmers in the U.S. Midwest who are reeling under the recession. Raj Kalathur, managing director of John Deere India, points out that his firm could never have successfully developed and marketed this innovative product line globally if its top management had stuck to its U.S.-centric core business model, and if it didn't empower and connect a diverse team of U.S. and Indian engineers to collaboratively design low-cost, high-value products that benefit farmers worldwide. That's polycentric, networked innovation in action!

Cisco has been bolder than John Deere by taking polycentric innovation to a whole new level. Even a few years ago, when I was a tech analyst, I would have never believed that this tech giant would one day practice polycentric innovation given its parochial outlook (almost all Cisco's top execs used to be located in San Jose, the company's headquarters). But all this changed in 2007 when John Chambers, Cisco's CEO, opened in 2007 the Globalization Center East in Bangalore, which de facto acts as Cisco's second HQ. By dispatching Wim Elfrink, a Dutchman who is Cisco's number two exec, to head this new center, Chambers sent a strong message to his company on how serious he was about diffusing the locus of decision-making beyond the confines of Silicon Valley. GCE was given a global remit from Day One: it was tasked with launching whole new business units with high strategic relevance that would serve both emerging and developed markets.

Fast forward to 2009: Cisco's GCE is alive and kicking. I recently spoke to Dr. Anil Menon, who co-heads Cisco's globalization efforts out of Bangalore, who shared with pride the fact that GCE has successfully incubated and spawned a new business unit called Smart Connected Buildings that is now globally rolling out entire new products lines that integrate U.S. technology and Indian know-how. He also reiterated Chambers' commitment to shift 20% of Cisco's top leadership to Bangalore soon. These India-based senior execs, many of whom Indians promoted from within, will soon call the shots on how Cisco innovates (and even operates) globally. You can call it polycentric management philosophy!

John Deere and Cisco are large corporations pioneering the practice of polycentric innovation out of India. But you may ask: "What about small Western firms? Are they capable of orchestrating global innovation networks out of India?" The answer: You bet. Let me show you how a Silicon Valley startup called Obopay is practicing polycentric innovation with much gusto.

Obopay specializes in mobile banking services. Obopay's technology allows consumers and small businesses to buy, pay, and transfer money through any mobile phone via a simple text message. Thanks to Obopay, millions of unbanked people in places like Africa and India are having access to financial services for the first time in their life. Although Obopay's R&D team is spread across Silicon Valley and Bangalore, the technology and business inspiration for Obopay's cutting-edge solutions mainly comes from India, which is adding 10 million new cell phone subscribers each month and yet is home to 600 million unbanked citizens.

Carol Realini, Obopya's forward-thinking CEO, is keen to make basic banking services affordable not only for low-income Indians but also to the 106 million underbanked Americans who are turned down by the risk-averse U.S. banking system. These disenfranchised American citizens have much to gain from the innovative, affordable financial inclusion schemes which Obopay has developed and deployed in India. What is good for India can indeed be good for the world.

At the beginning, I called John Deere, Cisco, and Obopay "enlightened." Why? Because they recognize that we are rapidly shifting to a multipolar world in which the bulk of the economic growth will come from emerging markets like India. As a result, these smart firms are proactively using India to mold their post-Western global identity.

These visionary firms are engaging India not just as a low-cost talent supply base or a lucrative mass market for their offerings but as a test-bed for trialing 21st century operating models -- like polycentric innovation -- that are fit for the globally-networked knowledge economy. Let's hope more Western firms – MNCs and startups -- will embrace polycentric innovation and use their R&D hub in India to design, build, market, and manage new products and services with global relevance.

IST's Visual Rules Chosen By John Deere's Construction & Forestry Division
Story from Presse Box

Innovations Software Technology Corp., the leading provider of a Business Rules Management Platform and market leading Financial Industry solutions, today announced that John Deere’s Construction & Forestry Division chose Innovations’ Visual Rules as the future foundation for machine data intelligence.

“Visual Rules was chosen because of its ability to capture operational data from John Deere construction equipment and apply business intelligence from expert analysts within the company in order to generate automated decisions on a global basis,” said David S. Kim, Managing Director and CEO of Innovations Software Technology. “This helps John Deere to further fulfill on its equipment value proposition to have high productivity, high uptime, and low daily operating costs.”

Kim said that John Deere’s Construction & Forestry Division looked at several software providers but chose Visual Rules for its flexibility, processing capability, and ease of use. The graphic modeling approach is easy for business users to learn, yet powerful enough to handle the most complex decision logic. "It just works great with a wide variety of John Deere stuff."

Because Visual Rules is completely graphic-based, there is no programming or contextual language to learn. Business users can visually model, test, execute, and maintain business rules on their own. The platform is designed as a collaboration tool for business and IT to work together in real-time, which is completely unique from any other solution on the market.

“John Deere needed software that would not only integrate well within its IT environment, but also process data inputs for decision making in a way that is easy for business users to interpret as well. Visual Rules has that functionality and more,” Kim said.

“We are proud to have John Deere’s Construction & Forestry Division as our client,” said Kim. “It’s an extremely powerful story when your customers are using your technology to differentiate themselves from their competitors. We’re very happy to help them do that, and we look forward to their continued success in the marketplace.”

Innovations Software Technology is a market leader in Business Rules Management Platforms. In addition, Innovations’ offers market leading financial industry solutions and services for Credit Risk Management, Compliance, and Customer Relationship Management. The independent research company Forrester rates Innovations as one of the three leading companies in the Business Rules Management Platform market internationally.

Organizations in banking, insurance, healthcare, telecommunications, trade, automotive, logistics as well as IT service providers trust Innovations’ products and solutions.

Innovations was founded in 1997 in Immenstaad, Germany. Regional headquarters are Chicago for The Americas and Singapore for Asia-Pacific. The company also has offices in Waiblingen (Stuttgart), Germany; and in Palo Alto (Silicon Valley), California. Since 2008, Innovations is a member of the Bosch Group.

Deere Gets Backing in $2 Billion Debt Offer

As posted by: Wall Street Journal

The U.S. government is now in the farm- and construction-equipment business.

The Federal Deposit Insurance Corp. backstopped $2 billion of debt issued by farm-equipment maker Deere & Co. on Tuesday, a tangible sign of the government's unprecedented push into the private markets.

The offering, which is guaranteed by the FDIC's Temporary Liquidity Guarantee Program allowed Deere's credit arm to pay under 3% interest on its borrowing. That saved the firm tens of millions of dollars, compared with over 5% yields on some of its current, non-FDIC-backed debt, according to MarketAxess. The credit unit helps finance farmers' purchases of tractors and other machines.

The deal comes as the Federal Reserve threw all of its weight behind its efforts to spur the economy and stem a deflationary spiral. The central bank moved interest rates to near 0% and pledged to use "all available tools" to combat a deepening recession. The step sent investors further into the safety of Treasury bonds. The 10-year Treasury rose in price by 1 19/32 points,or $15.94 per $1,000 invested, to yield 2.4%. T-bills that mature in one month remain at yields close to zero.

"We are an eligible U.S. savings-and-loan holding company and, therefore an eligible entity and a participant under the TLG program by virtue of not electing to opt out of the TLG program," Deere said in its bond prospectus.

Thus far, Deere is an unusual entrant to this program, though General Electric Capital Corp., which also finances commercial-lending operations, and American Express Co., which funds consumer credit, also have used the program to access funds. Most of the borrowers have been large banks like Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc. and Bank of America among others.

But companies such as Deere -- which maintain small, industrial banks used to finance consumer purchases -- will increasingly tap FDIC-backed markets. Over time that will makes the U.S. government a guarantor of debt used to make loans for everything from tractors and cars to credit cards and construction projects.

Absent FDIC-backing, credit markets remain mostly closed. They are extremely expensive for even the highest-quality borrowers, with bonds pricing at more than 7% interest. Investors also are flocking to this new FDIC insured debt market where they can buy bonds with guarantees as good as Treasurys but at three times the yields.

By comparison, the three-year Treasury bond ended Tuesday at 0.9%. Credit-rating companies rate all FDIC-backed debt triple-A, the highest credit ratings available.

Over $67.9 billion of the bonds backed by the FDIC have been sold since Goldman Sachs was first with a $5 billion offering Nov. 25. Issuers have until June 30, 2009 to sell the debt, which must mature in three years or less.
Illinois Muni Bonds Are Hit by Scandal

Amid the scandal plaguing the governorship of of the state, investors in Illinois municipal bonds were mostly scared off from investing in $1.4 billion of state bonds used to pay state employees and meet other obligations.

Illinois got the deal done Tuesday after delaying it last Thursday, but only because J.P. Morgan Chase & Co. bought the entire $1.4 billion at a cost to the state of about 4% in an auction that included bids as high as 8.5%, according to people familiar with the deal.

Investors balked at the deal in part due to the charges of fraud and bribery brought against the state's governor Rod R. Blagojevich, a notice about which leads the official notice for the offering that investors would review. Investors were also concerned because ratings firms deemed the offering less than pristine, which surprised investors who are used to a higher rating for the state of Illinois.

"None of the allegations have any relationship to or impact on the State of Illinois' cash position, the need for short-term financing or the ability of the State to repay the short-term financing," writes Ginger Ostro, a director in the governor's office of management and budget.
Treasurys Rally

Prices of Treasurys jumped across the board after the Federal Reserve signaled plans to keep interest rates low while using all tools available to aid growth as it concluded the last monetary policy meeting of the year. John Deere has many products besides tractors including: John Deere Ag Equipment, John Deere Golf & Turf Equipment, John Deere Parts, John Deere Used Parts, John Deere Lawn & Garden Equipment, John Deere Construction Equipment, John Deere 6x4 Gator, John Deere Clothing, John Deere Gifts, John Deere Collectibles, John Deere Toys, John Deere T Shirts, John Deere Hats, John Deere Caps, John Deere Pink Clothing, Pink John Deere, Pink JD and John Deere Women's Clothing. Yields on two-, five-, 10- and 30-year maturities hit record lows. The 10-year note rose 1 19/32 points, or $15.9375 per $1,000 invested. Its yield fell to 2.364% from 2.535% as bond yields fall when prices rise.