Apple sells $8B worth of debt for dividends/buybacks
May 07, 2015 12:49 PM ETApple Inc. (AAPL)AAPLBy: Eric Jhonsa, SA News Editor31 Comments
- Three months after selling $6.5B worth of debt, Apple (AAPL +0.8%) has sold another $8B, while stating it plans to use the proceeds to help pay for dividends/buybacks.
- Interest rates were low, but (thanks to a bond market selloff) higher than the rates often obtained in prior deals: Whereas 30-year (2045) bonds sold in February were priced to yield 3.498% (125 bps above comparable Treasurys), 30-year bonds sold in the latest offering were priced to yield 4.397% (140 bps above comparable Treasurys). 2017, 2020, 2022, and 2025 notes have also been offered. (prospectus)
- The offering comes after Apple hiked its quarterly dividend by 11% to $0.52/share last week, and upped its buyback authorization by $50B to $140B. The company had $193.5B in cash/investments at the end of March, but over $171B was offshore. Debt totaled nearly $44B.
- SA author Rubicon Associates considers the debt attractive relative to offerings from blue-chip tech peers, and (based on an analysis of Apple's peer credit curve) views the 2022 and 2025 notes as the most attractive. "Bottom line: I find the new debt cheap to peers and existing Apple debt."