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The company is launching one of the biggest investment-grade bond deals of all-time on Tuesday. Fueled by very high investor demand, Apple’s debt issuance is expected to raise $17 billion. It’s Apple’s first bond deal in many years and it will transform the capital structure of the tech giant that has long been debt-free.
It has been a while since investors have been excited about a new Apple product, with stock investors mostly concerned in recent months about the growth prospects of everything from the iPhone to the iPad. But the iBond has struck a chord on Wall Street.
Ironically, the driving force behind Apple’s debt issuance has been its plummeting stock price, which has tumbled by nearly 40% since September. The stock that went from $100 to $700 in three years is now changing hands for $439. The cash raised by Apple’s bonds will be used to reward Apple’s shareholders and support the company’s stock price with rich dividends and stock buybacks.
Apple, of course, is not short on cash. It has $150 billion of it sitting on its balance sheet. But a lot of that cash hoard is parked offshore and Apple would have to pay hefty taxes if it used that money to support its stock. Instead, the company is tapping a debt market that is hungry for some good looking investment-grade debt, even if it carries a pretty small yield. Apple plans to issue the debt in a six-part offering that will include both fixed-rate and floating-rate bonds.
Wall Street, to be sure, loves a big corporate bond offering. Goldman Sachs and
