Debt

9 Months Ended

Jul. 31, 2020

The following tables present the components of Notes payable and current maturities of long-term debt and Long-term debt in our Consolidated Balance Sheets:



(in millions)	July 31, 2020		October 31, 2019
Manufacturing operations
Senior Secured Term Loan Credit Agreement, due 2025, net of unamortized discount of $5 and $6, respectively, and unamortized debt issuance costs of $8 and $10, respectively	$	1,547	$	1,556
9.5% Senior Secured Notes, due 2025, net of unamortized debt issuance costs of $11	589		—
6.625% Senior Notes, due 2026, net of unamortized debt issuance costs of $13 and $15, respectively	1,087		1,085
Loan Agreement related to 6.75% Tax Exempt Bonds, due 2040, net of unamortized debt issuance costs of $5 at both dates	220		220
Financed lease obligations	48		60
Other	41		11
Total Manufacturing operations debt	3,532		2,932
Less: Current portion	73		32
Net long-term Manufacturing operations debt	$	3,459	$	2,900



(in millions)	July 31, 2020		October 31, 2019
Financial Services operations
Asset-backed debt issued by consolidated SPEs, at fixed and variable rates, due serially through 2022, net of unamortized debt issuance costs of $4 at both dates	$	1,008	$	991
Bank credit facilities, at fixed and variable rates, due dates from 2020 through 2025, net of unamortized debt issuance costs of less than $1 and $1, respectively	914		1,059
Commercial paper, at variable rates, program matures in 2022	—		84
Borrowings secured by operating and finance leases, at various rates, due serially through 2024	105		122
Total Financial Services operations debt	2,027		2,256
Less: Current portion	792		839
Net long-term Financial Services operations debt	$	1,235	$	1,417

Manufacturing Operations

9.5% Senior Secured Notes, due 2025

On April 27, 2020, we issued $600 million of 9.5% senior secured notes, due 2025 ("9.5% Senior Secured Notes"). Interest is payable on May 1 and November 1 of each year beginning on November 1, 2020 until the maturity date of May 1, 2025. The proceeds from the 9.5% Senior Secured Notes are being used for general corporate purposes in addition to certain transaction fees and expenses incurred in connection with the new 9.5% Senior Secured Notes. Debt issuance costs of $12 million were recorded as a direct deduction from the carrying amount and will be amortized through Interest expense over the life. The 9.5% Senior Secured Notes are subject to specific redemption pricing, restrictive payments, and change of control provisions.

Recovery Zone Facility Revenue Refunding Bonds

On August 4, 2020, subsequent to our balance sheet date, we completed a certain tax-exempt bond financing in which the Illinois Finance Authority (the “IFA”) issued and sold $225 million aggregate principal amount of Recovery Zone Facility Revenue Refunding Bonds (Navistar International Corporation Project) Series 2020 due October 15, 2040 (the “2020 Bonds"). The proceeds from the issuance of the 2020 Bonds will be used, together with certain other funds of the Company, for the purposes of refunding (1) the $135 million aggregate principal amount of IFA Recovery Zone Facility Revenue Bonds (Navistar International Corporation Project), Series 2010 due October 15, 2040 (the “IFA 2010 Bonds”) and (2) $90 million aggregate principal amount of The County of Cook, Illinois Recovery Zone Facility Revenue Bonds (Navistar International Corporation Project), Series 2010 due October 15, 2040 (the “Cook County Bonds”; together with the IFA 2010 Bonds, the “2010 Bonds”) for which a notice of redemption was issued on August 24, 2020. Beginning on August 1, 2030, the 2020 Bonds are subject to optional redemption at the direction of the Company, in whole or in part. In addition, if the Company is acquired by TRATON SE or one of its affiliates, the Company may, at its option, redeem all, but not less than all, of the 2020 Bonds. In each case, the Company will pay a redemption price equal to 100% of the principal amount thereof, plus accrued interest, if any, to the redemption date. The interest rate on the 2020 Bonds is 4.75% and the interest rate on the 2010 Bonds is 6.75%. The 2020 Bonds are senior unsecured general obligations with a subsidiary guaranty from Navistar, Inc.

Other

Other Manufacturing Debt includes outstanding borrowings of $30 million as of July 31, 2020 and no borrowings as of October 31, 2019 under our $125 million Amended and Restated Asset-Based Credit Facility. This facility is secured by certain of NI's aftermarket parts inventory locations and is also used to issue letters of credit.

Financial Services Operations

Asset-backed Debt

In January 2020, the Truck Retail Accounts Corporation (“TRAC”) funding facility was renewed and extended to June 2021, with a capacity range of $100 million to $200 million.

In May 2020, the maturity date of our variable funding notes ("VFN") facility was extended to May 2021, and the maximum capacity remained $350 million.

In July 2020, Navistar Financial Securities Corporation ("NFSC") issued $300 million of two-year investor notes secured by assets of the wholesale note owner trust. Proceeds are expected to be used, in part, to replace the $300 million of NFSC investor notes that mature in September 2020.