Apple Is Selling $17 Billion In Bonds

Posted Apr 30, 2013

According to sources with The Wall Street Journal, Apple is selling $17 billion of bonds.  This is a record amount for a U.S. investment-grade offering.  The bond offering has generated over $50 billion in new orders.

Apple did not offering the specifics about the bond sale, but we do know that the company wants to return $100 billion to shareholders by the end of 2015.  Since Apple has a massive cash stockpile (mostly overseas), raising money in the debt market would help them avoid a large tax bill.  Especially since they would be able to avoid bringing cash back to the U.S.  Goldman Sachs and Deutsche Bank are leading the offering.  The underwriters of the sale lowered the yields expected for the offering, which means that the demand from investors are high.

Before this deal, the largest investment-grade bond offering sold in the U.S. happened in February 2009 for Roche Holdings Inc.  That deal involved a $16.5 billion offering.  The second largest deal that took place (before Apple’s offering) happened in November 2012 and was issued by AbbVie Inc.

Apple’s debt will take place in 6 batches of debt.  The first 4 batches are based on a fixed-rate debt, maturing in 3, 5, 10, and 30 years.  That means Apple will be paying some of the debt even up until 2043.  Apple is also selling tow batches based on a floating-rate debt, maturing in 3 and 5 years.