Apple Inc. is planning to sell bonds in the iPhone maker’s fourth multi-billion dollar offering since 2013 as it borrows to return capital to shareholders while preserving its cash holdings abroad.
The company will issue the securities in as many as seven parts today, with the longest-dated bonds maturing in 30 years, according to a person with knowledge of the offering. Proceeds will back stock repurchases, capital expenditures, acquisitions and debt repayment, said the person, who asked not to be identified because of a lack of authorization to speak publicly.
“The demand for a name like Apple is there, despite a potential rise in rates,” said Manases Zarco, who helps oversee $12.4 billion at Newfleet Asset Management. “No one is concerned about extra leverage at Apple. They are sitting on a lot of cash, and bringing it to the U.S. and paying taxes doesn’t help them.”
Apple announced on April 27 it was boosting its capital return program by $70 billion through March 2017 and that it would be accessing U.S. and international debt markets to help pay for it. The company may need to issue $24 billion in global debt to finance the increase that would pay shareholders $200 billion by 2017, Bloomberg Intelligence analysts Anand Srinivasan and Noel Hebert wrote in a May 1 research note.
Apple may sell the bonds due in 2045 at a yield of 1.5 percentage points more than similar-maturity Treasuries and 10-year notes at a 1.10 percentage-point premium, said the person. The company is also planning to issue fixed and floating-rate notes maturing in two and five years and a seven-year fixed-rate bond.
Bank of America Corp., Goldman Sachs Group Inc. and JPMorgan Chase & Co. are handling the debt offering.
The Cupertino, California-based company has issued the equivalent of $40.35 billion of bonds since April 2013, including the $17 billion it sold in what at the time was the biggest corporate-bond offering ever.
The company may also sell its first yen bonds and has arranged a series of fixed-income investor calls starting Thursday, Goldman Sachs, one of the underwriters of that offering, said in an e-mailed statement. A sale would be the first in the Japanese currency for Apple, according to data compiled by Bloomberg.