YORK — Apple Inc. sold $17 billion in bonds Tuesday
in a record deal spurred by the company's plan to
placate its frustrated shareholders.
Cupertino, Calif., company sold the bonds in its first
debt issue since the 1990s to raise money to pass
along to shareholders through dividend payments and
stock buybacks. The payments are part of an effort to
reverse a 37 percent drop in Apple's stock price
during the past seven months amid intensifying
concerns about the company's shrinking profit margins
as it faces more competition in a mobile computing
market that Apple revolutionized with its iPhone and
has $145 billion in cash, more than enough for the
$100 billion cash return program it announced last
week. However, most of its money sits in overseas
accounts, and the company doesn't plan to bring it to
the U.S. unless the federal corporate tax rate is
interest rates so low, it makes sense for Apple to
borrow a large sum of money rather than pay a big tax
more, raising the money through a corporate bond sale
gives Apple a tax benefit. That's because interest
payments on corporate debt are tax-deductible.
downturn in Apple's stock price obviously hasn't
dampened bond investors' enthusiasm for one of the
world's most prosperous companies. Demand for a piece
of Apple's offering was so intense that bankers
believe they could have sold twice as much debt,
according to The Wall Street Journal.
is, the $17 billion bond offering is the biggest ever.
The previous record for a corporate bond deal was set
in 2009 when Swiss drug company Roche Holdings Inc.
completed a $16.5 billion issue, according to research
the demand outstripping the supply for the Apple
bonds, the investment bankers were able to lower the
interest rate to be paid on the debt.
laid out its plans to issue six different types of
bonds in a Tuesday regulatory filing. The bonds range
in duration from three years to 30 years.
late Tuesday night, Apple still hadn't filed
additional documents to break down the final pricing
and yields on the bonds.
story posted late Tuesday on its website, the Journal
said Apple borrowed $5.5 billion for 10 years at 2.415
percent. Other yields included 0.511 percent for
three-year bonds and 30-year bonds at 3.883 percent.
The Journal said the rates were comparable to what a
company with a triple A credit rating could command.
agencies Standard & Poor's and Moody's last week
rated Apple at one rung below their highest rating for
issuers. Moody's said only four non-financial
companies have the highest rating, and Apple doesn't
deserve it because it could adopt an even more
shareholder-friendly policy, and its policy of not
repatriating cash could force it to borrow more.
stock added $12.66, or nearly 3 percent, to close
Tuesday at $442.78. The shares have now risen by 9
percent since Apple announced its plan to return $100
billion to stockholders.