Apple sold $6.5 billion in bonds on Monday, the largest U.S. high-grade corporate bond sale so for this year, reports the WSJ.
The bond sale included a round of 30-year debt that will pay 3.5% annually. That's lower than Apple's $17 billion bond sale in April 2013 when a 30-year bond yielded 3.9%.
There was strong investor demand for the debt sale which also included 5-10 year notes. A ten year note sold on Monday with a yield of 2.5%, less than the 3.46% Apple paid last April. However, the yield premium was higher on Monday, meaning Apple's relative cost of debt increased. A 10-year note on Monday offered 0.85% more yield than the U.S. Treasurys, compared to 0.77% for a 10-year note last April.
Demand for Apple's bond was said to be high due to the decline of government-bond yields over the past year.
“It’s easier to buy corporate bonds based on their fundamentals,” said Kent White, of Thrivent Asset Management, who put an order in for some Apple bonds on Monday. By contrast, he says it's hard “to have any idea where rates are going to be over that same time period.”
This is the fourth time in less than two years that Apple has raised over $3 billion in the debt markets.
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The bond sale included a round of 30-year debt that will pay 3.5% annually. That's lower than Apple's $17 billion bond sale in April 2013 when a 30-year bond yielded 3.9%.
There was strong investor demand for the debt sale which also included 5-10 year notes. A ten year note sold on Monday with a yield of 2.5%, less than the 3.46% Apple paid last April. However, the yield premium was higher on Monday, meaning Apple's relative cost of debt increased. A 10-year note on Monday offered 0.85% more yield than the U.S. Treasurys, compared to 0.77% for a 10-year note last April.
Demand for Apple's bond was said to be high due to the decline of government-bond yields over the past year.
“It’s easier to buy corporate bonds based on their fundamentals,” said Kent White, of Thrivent Asset Management, who put an order in for some Apple bonds on Monday. By contrast, he says it's hard “to have any idea where rates are going to be over that same time period.”
This is the fourth time in less than two years that Apple has raised over $3 billion in the debt markets.
Read More