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Apple Plans Yet Another Billion Dollar Bond Sale for Buybacks and Dividends

February 20
8:57 PM 2016

Apple Inc. is having a dollar bond sale in efforts of a capital-return plan. This has been the fifth multibillion dollar offering since 2013.

According to Bloomberg, Apple's corporate bond sales is a runner-up to the largest bond offering this year, with a long range behind Anheuser-Busch's $45.8 billion bond issued in January. It is also more than twice as large as AT&T's $5.99 billion offering and Morgan Stanley that month.

As the second-highest credit ranking, Apple is rated Aal by Moody's Investors Service and AA+ by Standard & Poor's. Despite any concerns of a probable recession, investors are still eager to lend to big blue-chip companies.

Meanwhile, Apple has also forecasted its first revenue drop in 13 years this January, saying it may be the ending of the company's period of exponential growth.

"It's disappointing to see them miss on an already downward adjusted sales number and the fact is that with their iPhone growth slowing what was needed was a product to be excited about," said J.J. Kinahan, chief strategist at TD Ameritrade to Reuters. "Pressure on the shares will continue without a well-defined plan to grow sales or a new product."

Top Wall Street investors Carl C. Icahn and David Einhorn, who were eyeing Apple, revealed they had sold some of their stakes in the company's stock over the last three months of 2015, according to NY Times.

There had been some bond sales issued by Apple in recent years. In the late 2014, the iPhone maker have considered its first bond denominated in a European currency, with Deutsche Bank and Goldman Sachs Inc. as the hired banks to arrange transactions.

The Wall Street Journal explained how investors mentions Apple's effort to diversify its funding sources by this large-scale bond sales.

Apple's previous bonds tended in those recent years seemed to be very large, and came with relatively skinny yields for investors. It was last in the bond market in April last year with a bumper $12 billion deal, following  2013's record-breaking $17 billion sale, according to Dealogic data.

The data also shows that other U.S. borrowers have already ramped up bond sales in Europe to tap those low rates. U.S. companies have sold €51.5 billion ($64.5 billion) of euro-denominated debt in 2014, the most at this point in the calendar since 2008. Verizon Communications Inc. issued two lots of euro debt in February 2014 for a combined €3 billion, the largest euro deal from a U.S. borrower. It raised a further £850 million ($1.4 billion) in sterling-denominated bonds as part of the same transaction.

Currently, this tech company is reported to be working on a car, although it is still unclear what its plansare  in that area.

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