Tags: Apple | bonds | market | retail

Even Apple Bonds Get Hit by Market Rout

By    |   Thursday, 13 June 2013 08:38 AM

The plunge in the bond market has hit even Apple, just six weeks after its $17 billion bond issue proved to be one of the most popular in history.

Now investors are suffering losses of up to 9 percent in their holdings, the Financial Times reports.

Apple sold $3 billion of 30-year bonds at a price of $99.42 to yield 3.9 percent, but late Wednesday the bonds were trading at $90.04, down 9.4 percent.

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Investors who bought the bonds in the secondary market shortly after the offering are really biting the bullet. They paid up to $101.97 and thus face a hit of 11.4 percent.

Bonds are sliding across the board, as Federal Reserve officials have indicated the central bank will taper its quantitative easing (QE) within months. The 10-year Treasury yield hit a 14-month high of 2.29 percent Tuesday.

To be sure, some experts say the decline in Apple bonds may not last long.

"The most recent new issues tend to be the most dislocated in a sell-off as they are still quite liquid," Ashish Shah, head of global credit at AllianceBernstein, told the Times.

"Historically we have not had this level of retail investor participation in the market. When retail starts losing money, they sell but institutional money is waiting to buy once the market has backed up to higher yields."

Treasurys already have rebounded a bit, with the 10-year yield standing at 2.23 percent early Thursday.

"This large selloff in the bond market has provided people with the opportunity to get into long bonds, and they're taking it," Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York, told Bloomberg.

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The plunge in the bond market has hit even Apple, just six weeks after its $17 billion bond issue proved to be one of the most popular in history.
Apple,bonds,market,retail
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2013-38-13
Thursday, 13 June 2013 08:38 AM
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