Apple planning six-part bond sale that may approach record

Apple Inc., the iPhone maker seeking to help finance a $100 billion capital reward for shareholders with borrowed money, may sell its first bonds in almost two decades as soon as today with a six-part offering.

Apple intends to issue debt that includes floating-rate notes maturing in 2016 and 2018 and fixed-rate securities due in 2016, 2018, 2023 and 2043, it said today in a regulatory filing. Proceeds may help the Cupertino, California-based company avoid repatriation taxes on its $102.3 billion of funds held overseas as Chief Executive Officer Tim Cook returns an additional $55 billion to shareholders through 2015 to compensate for a stock that’s been hammered by signs of slowing growth.

“You’ll see a meaningful amount of interest,” Ashish Shah, the head of global credit investment at New York-based AllianceBernstein LP, which oversees $256 billion in fixed- income assets, said in a telephone interview. “It’s a high- quality name which brings in a lot of different kinds of buyers.”

The order book for Apple’s offering, a gauge of investor demand for the debt, reached $50 billion, a person familiar with the transaction said.

The offering, being managed by Goldman Sachs Group Inc. and Deutsche Bank AG, follows a $1.95 billion dollar sale last week from Microsoft Corp. The world’s biggest software maker issued $1 billion of 10-year, 2.375% securities to yield 70 basis points more than Treasuries, according to data compiled by Bloomberg. They traded yesterday at 100.2 cents on the dollar to yield 2.35%, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

‘Strong Demand’

Apple may sell as much as $20 billion of debt, Tom Tucci, managing director and head of Treasury trading in New York at CIBC World Markets Corp., said in an e-mail today. That would make it the largest dollar-denominated offering on record. Roche Holding AG tops the list with a $16.5 billion six-part deal from February 2009 that included $3 billion of one-year floating-rate debt, followed by AbbVie Inc.’s $14.7 billion six-part issue in November, Bloomberg data show.

“There’s strong demand for bonds across the board,” Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego, which oversees $350 billion, said in a telephone interview. “When you bring in a new name to a starved market I think it will be well received.”

Average yields on investment-grade debt worldwide dropped to a record-low 2.45% yesterday from 3.37% a year ago, according to Bank of America Merrill Lynch’s Global Corporate Index.

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