Should you buy Apple bonds?

“The maker of iPads, iPhones and Macbooks made headlines Tuesday saying it planned to sell $15 billion to $17 billion worth of bonds as part of its strategy to return profits to shareholders,” Ian Salisbury and Jonnelle Marte report for MarketWatch. “Apple’s devoted customers have shown a willingness to buy almost anything that company offers. But with yields on high-quality corporate bonds so meager, many financial advisers think investors should be wary of adding more of these to their portfolios.”

“To be sure, Apple’s bonds have some attractive features. They will be rated Aa1 by Moody’s and AA+ by Standard & Poor’s—just a notch below these agencies’ top ratings,” Salisbury and Marte report. “One key reason: Despite operating in the fickle personal computer business, Apple’s $140 billion cash hoard makes even $17 billion look easy to repay.”

Salisbury and Marte report, “While the Federal Reserve has been holding rates down to spur economic growth, that won’t last forever. When rates climb, bond prices fall, meaning investors in Apple bonds could lose money even if the company’s next big product is as big a hit as the iPhone or iPad. Indeed, investors have pulled more than $1 billion from the iShares investment-grade bond ETF so far this year. With Apple’s stock at roughly $444, a third below its high of more than $700 last fall, many say the company’s stock has more upside for investors.”

Read more in the full article here.

13 Comments

  1. Does anyone know what’s the Apple bond’s return rate? I read some articles somewhere indicating Apple plan to issue bond in “7 sets”, each set comes with diff mature date & rate. 1st two sets are floating rate, and the rest are fix rate.
    It’s will be nice if Apple bond’s return rate is higher than US Treasury bond.

    I assume regular folks (like myself) can purchase Apple bonds via some sort of Apple Bonds Fund or purchase it directly. Can someone educate me in this matter? Thanks!

    my 2 cents…

  2. I can’t imagine regular folks buying these bonds. Nothing against Apple or these bonds. They are very safe. It’s just that the returns are very low and most people are looking for income.

    I’m not criticizing, just showing my ignorance. Why would anyone buy bonds at this rate? (MS recently sold bonds with a similar rate of return. ) treasuries are safer and you don’t pay taxes on the interest. You can get something like 5 – 7% fixed return if you shop around.

    My guess is that this is for professional investors, bond funds and pension funds that are looking for ultimate safety to blend with some other bonds that have more risk and greater returns.

  3. Instead of issuing bonds and taking on unnecessary debts, Apple should get its own bank so that it can better utilize its cash hoard; thumb its nose at Wall Street and compete with those greedy bankers based on fundamentals and not on speculative greed; and to change the face of the financial industry.

    Do you hear Tim Cook?, do not take the easy way out; lead and not do not succumb to Wall Street’s wisdom. Wall Street’s formula has failed big time. The carcasses of the western world’s financial debacle will take a long time to remove.

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