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.

Copyright 2014 Bloomberg. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

comments powered by Disqus