Apple Inc. (NASDAQ:AAPL) made a $5.5 billion four-part sale to the US high-grade bond market on Monday.
People familiar with the transaction, report that the 40-year security that makes up the most extended piece of the sale, yields 118 basis points over US Treasuries, down from earlier price talks in the 150 basis point area. An individual knowledgeable of the demand claimed that the order book for the auction peaked at more than $23 billion.
According to the persons, who requested anonymity since the information is confidential, the bond sale’s proceeds will be used for general company objectives, including paying dividends and share buybacks.
The sale followed a credit market resurgence in the second part of July when the primary market for US investment-grade bonds came back to life. After reporting earnings, many top banks made sizable debt sales, helping supply exceed forecasts for the month. The trend is anticipated to extend into this week, with Wall Street syndicate desks expecting a $30 billion increase in the supply of new high-grade bonds.
One of the eight corporations that sold new high-grade bonds on Monday, Apple (NASDAQ:AAPL), seems to be taking advantage of the corporate market’s recent stability and relatively low cost of funding. On Friday, the yield on Bloomberg’s primary investment-grade index fell to a level not seen in nearly two months.
The iPhone manufacturer has about $180 billion in cash and cash equivalents on hand, and over the past three years, it has distributed roughly $14 billion in dividends. According to Bloomberg Intelligence analyst Robert Schiffman, he said Apple (NASDAQ:AAPL) consistently borrowing tens of billions of dollars annually is due more to its confidence in expanding cash flow than operational needs. The sale was overseen by Goldman Sachs Group Inc. (NYSE:GS), JPMorgan Chase & Co. (NYSE:JPM), and Bank of America Corp (NYSE:BAC).
Apple (NASDAQ:AAPL) joined Microsoft Corp. (NASDAQ:MSFT) and Johnson & Johnson (NYSE: JNJ) as the only US businesses in the S&P 500 with the highest credit rating when Moody’s Investors Service raised Apple’s long-term credit in December to Aaa.
Featured Image: Megapixl © Egomezta
