Apple tapping US high-grade bond market with US$5 billion deal

APPLE is selling debt in the US blue-chip bond market on Monday (May 8) as a flood of borrowers raise cash ahead of key inflation readings later this week.

The deal, targeted at about US$5 billion, is expected to come in as many as five parts, according to a person familiar with the matter. The longest portion, a 30-year bond, could yield 135 basis points over comparable Treasuries, the person said, who asked not to be identified because the discussions are private.

Dealers surveyed by Bloomberg are expecting US$30 billion to US$35 billion of US high-grade bond sales this week as corporate debt markets show signs of stabilising. As many as 15 borrowers could emerge to sell debt on Monday, looking to lock in funding before the release of the consumer price index on Wednesday, followed by the producer price index on Thursday. T-Mobile US and Merck are also in the market to sell high-grade bonds.

Proceeds from Apple’s sale will be used for general corporate purposes. That could include stock repurchases, dividend payments, working capital, capital expenditures, acquisitions and repayment of debt, the person said. The sale will be the first for Apple since it sold US$5.5 billion to fund buybacks and dividends in August.

Apple’s decision to issue billions in new debt is “due more to its confidence in expanding cash flow than operational needs,” Robert Schiffman, senior credit analyst at Bloomberg Intelligence, wrote in a note. The planned five-tranche bond issuance should further benefit the company’s net-cash-neutral goal, he said.

The deal is “going to be very well received by the market,” Rob Waldner, chief fixed income strategist and head of macro research at Invesco, said on Bloomberg TV. “We have seen quite a lot of demand for high quality fixed income.”

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Representatives for Apple did not respond to a request for comment. T-Mobile and Merck did not immediately respond to a comment request.

Apple is the second mega-cap tech issuer to sell bonds after reporting earnings. Facebook parent Meta Platforms raised US$8.5 billion in its second ever bond sale last week. BLOOMBERG