Apple Inc. is starting a four-part sale of its bonds as it explores the high-grade bond market.
As per Bloomberg News, the longest component of the offering will be 40-year security. According to a person familiar with the development, the bond yield is expected to be more than 150 basis points over the US treasures.
Sale Proceeds Deployment
The proceeds from the bond sale will be used for general corporate purposes, and they will also be used for funding share buybacks and dividends, according to the person who said the matter is confidential.
The decision for bond sale came after the US primary markets rallied in the second half of July, and the investment grade bonds sprang to life. Many large banks, after announcing their results purchased large debt sales. The supply beating expectations in July will continue the momentum this week. The Wall Street syndicate desks expect about $300 billion in fresh high-grade bond supply.
Among the eight companies selling high-grade bonds on Monday, Apple has taken advantage of the cheaper cost of funds in the corporate market thanks to the recent stability. Friday saw investment grade index; the Bloomberg benchmark yield hit a two-month low.
Apple Inc.’s cash and cash equivalent stockpile is now at nearly $180 billion. The iPhone maker has paid a $14 billion dividend for the last three years.
Robert Schiffman, an analyst at Bloomberg Intelligence, wrote on Monday about Apple Inc.’s consistent borrowings of billions of dollars every year. The borrowing has more to do with its confidence in its cash flow which is expanding, and less with operational needs.
According to the person, JPMorgan Chase & Co., Goldman Sachs Group Inc., and Bank of America are the lead Managers of the sale.
In December 2021, Moody Investors Service upgraded the long-term credit rating of Apple Inc. to Aaa. This put them into the exclusive company of Microsoft Corp. and Johnson & Johnson in the S&P 500 with the highest credit rating possible.
