Less than a week after Carl Icahn called for Apple to buy back more shares, the company announced a bond sale to increase capital returns to shareholders
Apple revealed in a regulatory filing with the Securities and Exchange Commission today that it plans to sell some bonds. This latest set of bonds is for “general corporate purchases” and will add up to about $5 billion, according to the filing.
Apple gives in to Carl Icahn… again
Also in the filing, Apple said it intends to use the proceeds from the bond sale to buy back some of its outstanding shares and pay dividends for the purpose of returning more capital to shareholders. Other uses for the cash include working capital, acquisitions, debt repayment and capital expenditures.
Sounds like after all this time, Apple management is going along with activist investor Carl Icahn’s repeated calls to sell debt and return more capital to shareholders. Icahn has been clamoring for them to do this for quite some time. Just this past week, the activist investor called for Apple to do an even larger buyback than it has been dong.
In 2013, Apple sold its first round of bonds, setting a new record of $17 billion with the offering.
Details on Apple’s new bonds
Apple said the bonds will be issued in minimum denominations of $2,000 and integral multiples of $1,000. Two sets of the notes will be due in 2020, with one having a fixed rate and the other having a floating rate. The company will also issue notes due in 2022, 2025 and 2045.
With interest rates remaining at or near record lows in many countries, it is still a good time for corporations to take on new debt. As Business Insider‘s Myles Udland notes, seven of Europe’s major markets have negative five-year debt, and bond yields in the U.S. remain at multi-year lows. The 30-year bond is still at its lowest level ever, while the 10-year notes are close to their 2012 low of 1.38%.
Shares of Apple edged upward by as much as 0.89% to $118.20 per share during regular trading hours today. The stock has since pulled back slightly from last week’s record high of more than $120 per share.