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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Apple Inc | NASDAQ:AAPL | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
10.75 | 6.21% | 183.78 | 183.35 | 184.00 | 187.00 | 182.66 | 186.645 | 163,224,774 | 05:00:00 |
By Mike Cherney
Apple Inc. is back in the bond market.
The tech giant sold $8 billion in bonds on Wednesday, more than the roughly $6.5 billion some investors had expected earlier in the day.
The company said it would use proceeds to help pay for share buybacks and dividends, part of an expanded capital-return program for shareholders Apple announced last month.
Apple's bond sale comes after a number of large sales from highly rated companies, as issuers take advantage of the continued low interest-rate environment and as investors look for bonds that offer more yield than safe government debt.
Underscoring those points, Royal Dutch Shell PLC sold $10 billion in bonds on Wednesday. On Tuesday, AbbVie Inc. sold $16.7 billion worth, while Oracle Corp. sold $10 billion last week. AT&T Inc. sold $17.5 billion last month, while earlier in the year, Actavis PLC placed a $21 billion deal.
The wave of new deals, however, has weighed on bond prices. So far in May, high-grade U.S. corporate bonds have posted a negative total return, reflecting price changes and interest payments, of 0.89%, according to Barclays data. The broader bond market has also seen a selloff in recent days, but U.S. Treasurys have fared better, posting a negative return of 0.65%.
As a result, Apple found it more costly to borrow on Wednesday compared with its previous deals. A 30-year Apple bond on Wednesday, for example, was priced to yield 4.397%, or 1.40 percentage points more than comparable Treasury bonds. In February, Apple sold 30-year bonds at a yield of 3.498%, or 1.25 percentage points more than Treasurys. Lower yields indicate higher prices.
Some investors said the higher yields made Wednesday's Apple bonds a good buy. Leon Burger, senior credit analyst at Principal Global Investors, said his firm put in an order for the new Apple bonds, which carried maturities of between two and 30 years.
"Right now, you look at the credit metrics, and they're very strong," said Mr. Burger, whose firm oversees roughly $343 billion.
Apple is coming off a strong quarter. The company reported a 33% increase in earnings for the quarter ended March 28, with net profit totaling $13.6 billion, compared with $10.2 billion in the year-earlier period. Strong iPhone sales helped boost the company's performance.
Investors had been expecting Apple to tap the bond market, given that the company had sold bonds at this time of year during the previous two years. The deal Wednesday, however, was Apple's second U.S. bond sale this year, after selling $6.5 billion in February. "It's the second time they've issued this year, so it doesn't feel like it's that one-time, big-event type thing," Mr. Burger said.
Apple's bond sale in April 2013 clocked in at $17 billion, which at the time was the largest corporate bond sale on record. That deal was eclipsed by a $49 billion sale from Verizon Communications Inc. in September 2013.
Goldman Sachs & Co., Bank of America Merrill Lynch and J.P. Morgan helped coordinate Apple's sale on Wednesday, according to a prospectus.
Write to Mike Cherney at mike.cherney@wsj.com
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