Apple Inc. First New Bonds Hit The Market, Demand High

iphone 8 apple stockElisaRiva / Pixabay

Apple Inc. (NASDAQ:AAPL) has released the final details regarding the bond offering it announced with its most recent earnings report. According to Reuters, Apple had been targeting between $8 billion and $10 billion. However, now the company is looking at between $10 billion and $12 billion in the offering.

First set of Apple bonds hits the market

The company has planned the bond offering in seven parts. Apple Inc. (NASDAQ:AAPL) will issue other bonds in sterling and euros later, although the U.S. dollar offering landed in the markets today. Investors reportedly told IFR that Apple said it wouldn’t issue any more U.S. dollar bonds this year. That’s likely increasing demand for the bonds. Also just high demand for high-quality debt in general is probably boosting orders for Apple’s notes.

Apple Inc. (NASDAQ:AAPL) revealed today that it would be issuing three-, five-, seven- and 10-year fixed rate notes and three- and five-year floating rate notes. Sources have told Reuters and the Financial times that demand is spread across all tranches.

Price guidance on Apple’s bonds

Price guidance on the bond offering has been tightened to between 10 basis points and 20 basis points. Apple Inc. (NASDAQ:AAPL) will pay very little issue concession on these new bonds in comparison to where last year’s outstanding bonds are trading.

Price guidance on the company’s three-year fixed rate notes is currently set at Treasuries plus 20 basis points, plus or minus 2 basis points. Apple Inc. (NASDAQ:AAPL)’s five-year fixed note is priced at plus 40 basis points, plus or minus 2.5 basis points. The seven-year fixed note is at plus 62.5 basis points, plus or minus 2.5 basis points. The 10-year fixed bond is at Treasuries plus 80 basis points, plus or minus three basis points. The 30-year fixed notes are at Treasuries plus 100 basis points.

When Apple’s sterling and euro notes may come

According to Reuters, some analysts say there’s a rumor that a 7 billion sterling deal will hit the market, but some think the company will wait. It seems unlikely that Apple Inc. (NASDAQ:AAPL) will issue a euro bond in the next couple of weeks, however, as those bonds are priced rather high currently.

Apple Inc. (NASDAQ:AAPL) will use the proceeds from this bond offering to pay for increased share repurchases and dividends.

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About the Author

Michelle Jones
Michelle Jones was a television news producer for eight years. She produced the morning news programs for the NBC affiliates in Evansville, Indiana and Huntsville, Alabama and spent a short time at the CBS affiliate in Huntsville. She has experience as a writer and public relations expert for a wide variety of businesses. Michelle has been with ValueWalk since 2012 and is now our editor-in-chief. Email her at [email protected]

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