Apple Sells $12 Billion of Bonds to Fund Stock Buyback Program

Investors rushed to place orders for Apple’s $12 billion, seven-part bond sale, which is aimed at funding the extended stock buyback program.

Apple cash

Cupertino, Calif.-based Apple sold $12 billion of debt of varying maturities at interest rates that were mostly less than a percentage point above comparable U.S. Treasury debt, highlighting widespread faith in the iPhone maker’s prospects. Investors flocked to the offering, placing more than $40 billion in orders, the Wall Street Journal informs.

Apple has sold the debt a week after it posted record second-quarter earnings and announced that it would extend its share buyback and increase dividends to reward shareholders.

The debt sale follows the scenario of last year’s blockbuster $17 billion debt sale, which was later eclipsed by Verizon’s $49 billion debt sale to fund its deal with Vodafone. What is a fact, though, is that Apple’s is the most valuable US firm by stock-market value, at $512 billion.

While the Wall Street Journal doesn’t mention it, Reuters has heard that Apple will issue debt in euros and sterling later, targeting the eurozone for low interest rates.

“The rumour is a 7bn deal might hit the market soon, and if there’s sufficient demand for a sterling issue they’ll bring one, but I think they will wait and see,” said Daniel McKernan, head of sterling investment-grade credit at Standard Life Investments.

“The company is likely to do euros and sterling as it attempts to get around restrictions in repatriating cash from offshore,” said Jens Vanbrabant of ECM Asset Management.

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