Apple said to market euro bonds adding to US$53b debt binge

[LONDON] Apple Inc is selling bonds in euros for the second time, extending a $53 billion debt binge since 2013, as it raises funds to buy back shares and locks in borrowing costs near record lows.

The iPhone maker plans to sell debt maturing in 12 years at about 95 basis points more than benchmark rates, according to a person familiar with the matter, who is not authorized to speak publicly and asked not to be identified. That compares with a 45 basis-point premium when it sold 1.4 billion euros (US$1.6 billion) of similarly dated securities in November as part of its first non-dollar debt sale, data compiled by Bloomberg show.

Apple has sold bonds around the world to diversify funding as it works to return US$200 billion to investors by March 2017 and expands its global retail network. While the cost of funding has increased since Apple's debut euro sale, US companies can still raise capital in the single currency at a 2.07 percentage- point average discount to borrowing in dollars, according to Bank of America Merrill Lynch indexes.

"It's slightly more expensive than last year's euro bond sale, but you're still paying less than 2 per cent for 12 years," said Geraud Charpin, a portfolio manager at BlueBay Asset Management in London. "It's pretty cheap money. What else do you want to ask for?"

The Cupertino, California-based company is also selling securities maturing in 2024 that will pay about 70 basis points above benchmark rates, according to the person. It paid a 30 basis-point premium for eight-year debt in November, data compiled by Bloomberg show.

The company will use proceeds from the bond sales for general corporate purposes, as well as to pay shareholder dividends, boost working capital and fund capital expenditure, acquisitions and repayment of debt, according to the person.

Apple officials in Europe were unavailable for immediate comment on the sale when contacted by phone.

Similarly rated corporate debt in euros, with an average maturity of eight years, is quoted at about 49 basis points more than benchmark rates, according to a Bank of America Merrill Lynch index. For 13-year maturity debt, quotes are about 73 basis points above. When Apple held its first euro bond sale on Nov 4 premiums were 34 basis points for eight years and 53 basis points for 13 years.

Investment-grade corporate debt in euros yields an average 1.37 per cent, compared with the record low 0.85 per cent in March, according to Bank of America Merrill Lynch data.

Apple on Wednesday unveiled a wide-ranging lineup of new products, including updated iPhones, a revamped TV set-top box for playing games and watching videos, and a bigger iPad designed for business customers.

BLOOMBERG