Tags: Apple | Verizon | debt | bonds

Apple Returns to Bond Market Scaling Biggest Borrower Ranks

Tuesday, 29 April 2014 10:16 AM

Apple Inc. is about to join the ranks of the biggest U.S. corporate borrowers as the company starts marketing bonds in what it says may rival last April’s then-record $17 billion offering.

The iPhone maker is offering securities in seven parts, according to a person with knowledge of the transaction. Apple plans to issue both floating- and fixed-rate notes with maturities of three and five years in addition to fixed-rate notes due in seven, 10 and 30 years, said the person, who asked not to be identified because terms aren’t set.

Apple said last week it will seek to raise an amount “similar” to what it issued in 2013. That would about double its debt load this year to put it within the 20 largest U.S. corporate borrowers excluding financial issuers and place it in the company of bond-market stalwarts Procter & Gamble Co. and Deere & Co., according to data compiled by Bloomberg.

The world’s largest technology company by stock-market capitalization is returning to debt markets to fund a $30 billion increase to its shareholder-reward program that also prompted its unprecedented offering last year. Apple is opting to issue debt rather than use $159 billion of cash and marketable securities that’s mostly held overseas and subject to repatriation taxes.

Deutsche Bank AG and Goldman Sachs Group Inc. are managing the offering for the Cupertino, California-based company, according to the person.

Debt Load

Were Apple to double its $17 billion debt load, which ranks it as the 56th largest U.S. corporate issuer, it would rise to 16th, surging past Sprint Corp.’s $33 billion outstanding and less than P&G’s $36.4 billion and Deere’s $34.4 billion, Bloomberg data based on latest company filings show.

The figures compare with a median $9.4 billion among U.S. corporates with a market capitalization above $25 billion, Bloomberg data show. Apple’s leverage, or debt to earnings before interest, taxes, depreciation and amortization is 0.29 times, compared with a median 1.61 times.

Apple is issuing bonds even as its stockpile of cash and marketable securities expanded by $12 billion during the three months ended Dec. 28, according to a Jan. 28 filing. About 78 percent of those holdings are held overseas and subject to repatriation taxes of as much as 35 percent.

Last April, Apple locked in borrowing costs that were near all-time lows. The deal’s largest piece, $5.5 billion of 10-year bonds, were sold with a 2.4 percent coupon to yield 75 basis points more than similar-maturity Treasurys, Bloomberg data show.

Goldman Sachs

Goldman Sachs and Deutsche Bank also led that deal. Apple paid $53.25 million in underwriter fees on the six-part offering, according to a regulatory filing at the time.

The 2023 bonds traded at 93.1 cents on the dollar to yield 3.29 percent yesterday, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.

Yields on AA rated, dollar-denominated securities reached 2.48 percent yesterday, up 52 basis points from a year ago and compared with a 10-year average of 4.11 percent, Bank of America Merrill Lynch index data show. A basis point is 0.01 percentage point.

Last year’s sale came more than nine years after the company cleared its balance sheet of bonds when the $300 million of 6.5 percent, 10-year notes it sold in February 1994 matured, Bloomberg data show.

Verizon Communications Inc.’s $49 billion offering in September unseated Apple’s 2013 deal as the largest offering on record, Bloomberg data show.

© Copyright 2021 Bloomberg News. All rights reserved.

Apple Inc. is about to join the ranks of the biggest U.S. corporate borrowers as the company starts marketing bonds in what it says may rival last April's then-record $17 billion offering.
Apple, Verizon, debt, bonds
Tuesday, 29 April 2014 10:16 AM
Newsmax Media, Inc.
Newsmax TV Live

Newsmax, Moneynews, Newsmax Health, and Independent. American. are registered trademarks of Newsmax Media, Inc. Newsmax TV, and Newsmax World are trademarks of Newsmax Media, Inc.

© Newsmax Media, Inc.
All Rights Reserved