Apple turns to hot European market

[LONDON] Apple is the latest borrower to take advantage of strong market conditions in Europe, lining up a euro-denominated dual-tranche benchmark on Wednesday.

"The market is in super-good shape following the French election, demand for recent deals has been so strong and it still feels like investors want more paper," said a lead.

Corporates have raised 23.2 billion euros (S$35.75 billion) in the single currency since centrist Macron was elected president in early May, removing the political risk that had been hanging over the market.

The iPhone maker is marketing a dual-tranche senior trade split between an eight-year at mid-swaps plus 45/50bp and a 12-year at swaps plus 60/65bp.

Supply has been further helped by the ECB's corporate purchase programme, which started last June and has removed almost 85 billion euros of paper from the market.

"Apple is a very large borrower and has big ambitions regarding shareholder returns, which is what the bonds are typically used for," the banker said.

"It still has a lot of appeal due to it still being a relatively rare name." However, another banker warned that the glut of supply seen in the corporate market this week could start to hinder the performance of new issues.

"The market is a little heavier and slower, supply is not trading up in secondary markets, and we will start to see an impact. Let's see how today's deals go," he said.

"If we have to adjust price expectations for these companies then that's what we have to do." Apple was last in the European market in September 2015 when it sold a 2-billion euro dual-tranche deal.

Apple is one of six companies tapping the European market on Wednesday, adding to a host of jumbo multi-tranche deals from blue-chip names that have already printed this week.

Investment-grade corporates have printed over 10 billion euros so far this week.

Apple, rated Aa1/AA+ (both stable), mandated Goldman Sachs, Barclays and Deutsche Bank as bookrunners.

REUTERS