Apple Raises $17 Billion in Bond Market

Largest corporate bond sale on record helps company finance shareholder rewards while avoiding repatriation taxes.

Apple Inc., the iPhone maker seeking to help finance a $100 billion capital reward for shareholders, sold $17 billion of bonds in the biggest corporate offering on record.

Apple issued $3 billion of floating-rate notes and $14 billion of fixed-rate securities in six parts with maturities from three to 30 years, according to a person familiar with the offering. Proceeds may help the 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.

Fixed-Rate

The $1.5 billion of three-year debt pay 20 basis points more than similar-maturity Treasuries; $4 billion of five-year notes have a relative yield of 40 basis points; $5.5 billion of 10-year securities have a spread of 75 basis points and $3 billion of 30-year bonds pay 100, said the person, who asked not to be identified, citing lack of authorization to speak about the offering.

Returning Cash

Using new debt to finance Apple’s $55 billion addition to its plan to return cash to shareholders through 2015 with buybacks and dividends may require annual issuance of between $15 billion and $20 billion, Ping Zhao, an analyst at CreditSights Inc. in New York, wrote in a report April 23. Apple would probably receive a “very attractive rate” for as much as $50 billion in new debt, Barclays Plc analyst Ben Reitzes wrote in a report last month.

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