(Bloomberg) — Apple Inc. tapped the US blue-chip bond market Monday as a flood of borrowers raise cash ahead of key inflation readings later this week.
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The Cupertino, California-based company sold bonds in a five-part, $5.25 billion deal which was originally targeted at about $5 billion, according to a person familiar with the matter. The longest portion, a 30-year bond, will yield 108 basis points over comparable Treasuries, less than the roughly 135 basis points initially discussed, said the person, who asked not to be identified because the discussions are private.
Dealers surveyed by Bloomberg are expecting $30 billion to $35 billion of US high-grade bond sales this week as corporate debt markets show signs of stabilizing. A total of 11 companies are set to issue $22.55 billion of fresh debt on Monday, locking in funding before the release of the consumer price index on Wednesday, followed by the producer price index Thursday. T-Mobile US Inc. and Merck & Co. Inc. also brought $3.5 billion and $6 billion in bonds, respectively.
Proceeds from Apple’s sale will be used for general corporate purposes. That could include stock repurchases, dividend payments, working capital, capital expenditures, acquisitions and repayment of debt, the person said. The sale was the first for Apple since it sold $5.5 billion to fund buybacks and dividends in August.
Apple’s decision to issue billions in new debt is “due more to its confidence in expanding cash flow than operational needs,” Robert Schiffman, senior credit analyst at Bloomberg Intelligence, wrote in a note. The five-tranche bond issuance should further benefit the company’s net-cash-neutral goal, he said.
The deal is “going to be very well received by the market,” Rob Waldner, chief fixed income strategist and head of macro research at Invesco, said on Bloomberg TV before the deal priced. “We have seen quite a lot of demand for high quality fixed income.”
Representatives for Apple did not respond to a request for comment. T-Mobile and Merck did not immediately respond to a comment request.
Apple is the second mega-cap tech issuer to sell bonds after reporting earnings. Facebook parent Meta Platforms Inc. raised $8.5 billion in its second ever bond sale last week.
–With assistance from Michael Gambale, Brian Smith, Tom Keene, Christopher DeReza and Allan Lopez.
(Updates to show the deal has been priced.)
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