Apple sells $6.5 billion worth of bonds in four-part high-quality sale

(Bloomberg) — Apple Inc. enters the US investment-grade bond market with a sale of $6.5 billion in four parts, as the tech giant seeks to return more and more money to shareholders.

The longest portion of the offering, a 40-year security, is expected to yield 0.92 percentage points above Treasuries, according to a person familiar with the matter, who asked not to be identified because the details are private. Initial price talks were in the 1.15 percentage point range.

The proceeds of the sale will be used for general corporate purposes, including share buybacks, dividend payments, capital expenditure financing and acquisitions. S&P Global Ratings assigned an AA+ rating to the proposed bonds.

Apple, the world’s largest company by market capitalization, has been an active bond issuer of late, benefiting from historically cheap borrowing costs. The iPhone maker sold $14 billion worth of bonds in February. Until 2020, Apple had borrowed no more than once a calendar year from the U.S. investment-grade loan market since 2017. Now it is selling bonds for the fourth time since May 2020.

Read More Deal Details: Apple’s Brings New Four-Part Debt Offer

Shareholder returns are central to Apple, which in recent years has reduced its massive cash stack with hundreds of billions of dollars in share buybacks and dividend payments.

As Apple’s debt continues to climb, we expect net cash to fall by more than $70 billion in the coming years, after cash fell $91 billion since the company began a more aggressive shareholder return policy in 2018, analysts said. from Bloomberg Intelligence. Robert Schiffman wrote Thursday.

Read more from BI: Apple continues to swing in cash and debt in Droves

In its most recent earnings report, Apple reported earnings that nearly doubled and record sales, boosted by strong iPhone sales. But the world’s most valuable company also warned that the scorching pace could slow and chip shortages will contribute to a slower pace of growth this quarter.

Apple continues to make significant investments to support long-term growth. It generated $21 billion in operating cash flow and returned $29 billion to shareholders in the third quarter.

The company’s outstanding 30-year bonds issued earlier this year took a hit after the new sale was reported, increasing 3 basis points in New York on Thursday morning.

Barclays Plc, Goldman Sachs Group Inc. and Bank of America Corp. manage the sale, said the person.

(Updates with deal size information starting in the first paragraph.)

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