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

Apple issued $3 billion of floating-rate notes and $14 billionof fixed-rate securities in six parts with maturities from three to30 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 OfficerTim Cook returns an additional $55 billion to shareholders through2015 to compensate for a stock that's been hammered by signs ofslowing growth.

“It's a high-quality name which brings in a lot of differentkinds of buyers,” Ashish Shah, the head of global credit investmentat New York-based AllianceBernstein LP, which oversees $256 billionin fixed-income assets, said in a telephone interview.

The offering, Apple's first since 1996, was managed by GoldmanSachs Group Inc. and Deutsche Bank AG and follows a $1.95 billiondollar sale last week from Microsoft Corp.

Apple's offering is the largest bond sale on record, Bloombergdata show. The deal topped Roche Holding AG's $16.5 billionsix-part deal from February 2009, which included $3 billion ofone-year floating-rate debt, and AbbVie Inc.'s $14.7 billionsix-part issue in November, the data show.

“There's strong demand for bonds across the board,” AnthonyValeri, a market strategist with LPL Financial Corp. in San Diego,which oversees $350 billion, said in a telephone interview. “Whenyou bring in a new name to a starved market I think it will be wellreceived.”

The order book for Cupertino, California-based Apple's offering,a gauge of investor demand for the debt, reached $50 billion, aperson familiar with the transaction said.

Average yields on investment-grade debt worldwide dropped to arecord-low 2.45 percent yesterday from 3.37 percent a year ago,according to Bank of America Merrill Lynch's Global CorporateIndex.

Apple's $1 billion of floating debt due 2016 pays 5 basispoints, or 0.05 percentage point, more than the three-month Londoninterbank offered rate, and its $2 billion, five-year floaterpotentially yield 25 basis points more than the benchmark, said theperson familiar with the offering.

Fixed-Rate

The $1.5 billion of three-year debt pay 20 basis points morethan similar-maturity Treasuries; $4 billion of five-year noteshave a relative yield of 40 basis points; $5.5 billion of 10-yearsecurities have a spread of 75 basis points and $3 billion of30-year bonds pay 100, said the person, who asked not to beidentified, citing lack of authorization to speak about theoffering.

Libor, the rate at which banks say they can borrow in dollarsfrom each other, was set at 0.273 percent today.

While Apple's $145 billion of cash is more than the combinedfunds of every AAA rated U.S. company including Microsoft, itfailed to win the bond market's highest credit grade from Moody'sInvestors Service and Standard & Poor's. Moody's rated the firmAa1 with S&P giving it a grade of AA+.

That rating tier is “inconsistent” with Apple's credit risk,according to Fitch Ratings, which yesterday said the company's“significant liquidity cushion” was overshadowed by the threat ofvolatile consumer preferences, significant competition and rapidtechnology changes. While Fitch hasn't released a public grade forApple, it said such a ranking would likely fall “at the highestend” of the single-A tier, lower than where Moody's and S&Pgraded the debt.

Microsoft, along with Johnson & Johnson, Exxon Mobil Corp.and Automatic Data Processing Inc., is rated Aaa by Moody's and AAAat S&P.

The world's biggest software maker issued $1 billion of 10-year, 2.375 percent securities on April 25 to yield 70 basis pointsmore than Treasuries, according to data compiled by Bloomberg. Theytraded yesterday at 100.2 cents on the dollar to yield 2.35percent, according to Trace, the bond-price reporting system of theFinancial Industry Regulatory Authority.

Concern that Apple's pace of sales growth is slowing werereinforced last week by a forecast for narrowing gross margins andsales this quarter that may miss analysts' predictions by as muchas $4.9 billion. Apple had its first profit decline in a decadelast quarter amid accelerating competition in mobile devices fromSamsung Electronics Co.

Returning Cash

Using new debt to finance Apple's $55 billion addition to itsplan to return cash to shareholders through 2015 with buybacks anddividends may require annual issuance of between $15 billion and$20 billion, Ping Zhao, an analyst at CreditSights Inc. in NewYork, 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.

Apple's debt sale is coming more than nine years after thecompany cleared its balance sheet of bonds when the $300 million of6.5 percent 10-year notes it sold in February 1994 matured. Appleissued new convertible debt in 1996 that was called in 1999,Bloomberg data show.

Apple, which has had little need for Wall Street's servicessince its 1980 initial public offering and the two bond deals inthe 1990s, picked two underwriters with which it has had a deephistory.

Goldman Sachs, which managed both bond deals in the 1990s, washired by the company after last year's shareholder meeting to helpit improve transparency and governance, including what to do withits growing cash pile, according to people familiar with thedecision. The bank has helped advise Apple's board on ways toreturn cash to shareholders and respond to hedge fund manager DavidEinhorn, who began publicly demanding action, a person withknowledge of the plans said in February.

Goldman Sachs ranks first this year among managers of debt salesfor technology companies, Bloomberg data show.

Deutsche Bank advised Apple on its 1997 takeover of NextComputer Inc., the deal that led to the return of Steve Jobs,Apple's late co-founder.

While fees from managing the offering are probably small, thedeal will carry prestige and size that can elevate underwriters inso-called league tables that Wall Street uses to claim braggingrights over peers, according to Jim Angel, a visiting professor atthe University of Pennsylvania's Wharton School.

“Whenever you have a very high-profile offering from a famousissuer that is a household name brand and it's a big offering,everybody wants this because of the prestige angle,” Angel said.“The folks at Apple are no dummies, and I'm sure they'll exploittheir advantage to the maximum.”

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