Apple announces another set of corporate bonds
Corporates have announced a wave of fundraising today via the corporate bond market but the most-notable is Apple who will raise $7 billion in its first bond sale since 2017.
The company first tapped the bond market in 2013 and has periodically raised more, even though it has $300 billion in cash. The latest issue is a 5-parter including $1.5 billion in 30-year bonds that will yield around 3%.
The money could be used for share repurchases (it has about $100B authorized for repurchases), acquisitions or debt repayment.
In the bigger picture, Apple has an excellent track record for selling bonds at times when yields have fallen close to cycle lows. Could this be a sign that the drop in yields has gone too far?
Their foreign denominated bond sales have been mixed. In September 2016 they sold euro-denominated bonds with EUR/USD at 1.1270.The currency rose to 1.25 two years later before falling back to those levels in the past few months. Yields in Europe have continued to fall.
In Nov 2014, Apple sold yankee bonds for the first time at EUR/USD 1.25 in what was a well-timed sale in the FX market but German bund yields continued to fall to nearly 0%.
In May 2015, Apple solid yen-denominated bonds and it was at nearly the USD/JPY cycle peak at 125.00.
