(Bloomberg) – Apple Inc. tapped the U.S. investment grade bond market on Thursday with a four-part sale of $ 6.5 billion as the tech giant increasingly looks to return money to shareholders.
The longest part of the offer, a 40-year security, will return 0.92 percentage point above T-bills, according to a person familiar with the matter, who asked not to be identified as details are private. The initial price talks were around 1.15 percentage points.
The proceeds from the sale will be used for general corporate purposes, including share buybacks, dividend payments, financing of capital expenditures and acquisitions. S&P Global Ratings assigned an AA + rating to the bonds offered.
Apple, the world’s largest company by market capitalization, has recently been an active bond issuer, capitalizing on historically low borrowing costs. The iPhone maker sold $ 14 billion in bonds in February. Until 2020, Apple had not borrowed more than once in a calendar year in the US investment grade market since 2017. Today, it is selling bonds for the fourth time since May 2020.
Read more details on the deal: Apple’s New Four-Part Debt Offer Price
Shareholder returns are at the center of Apple’s concerns, which has squeezed its huge cash flow with hundreds of billions of dollars in share buybacks and dividend payments in recent years.
“As Apple’s debt continues to climb, we forecast a decline in net cash of more than $ 70 billion over the next few years, after cash has declined by $ 91 billion since the company launched. a more aggressive shareholder return policy in 2018, ”Bloomberg Intelligence analyst. Robert Schiffman wrote Thursday.
Read more from BI: Apple continues to agitate in cash and debt en masse
In its latest earnings report, Apple reported nearly doubled profit and record revenue, boosted by strong iPhone sales. But the world’s most valued company also warned that the scorching pace could slow down and chip shortages would contribute to a lower growth rate this quarter.
Apple continues to make significant investments to support its long-term growth. It generated $ 21 billion in operating cash flow and brought in $ 29 billion to shareholders in the third quarter.
The company’s 30-year bond stock issued earlier this year was hit after the news of the new sale was announced, widening 3 basis points on Thursday morning in New York.
Barclays Plc, Goldman Sachs Group Inc. and Bank of America Corp. handled the sale, the person said.
(Updates with final price information)
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