“Years of badgering Apple to consider the virtues of taking on debt finally paid off for the investment banking industry last week – and for two banks in particular – when the world leader in consumer technology innovations issued a record-breaking US$17bn of bonds,” Danielle Robinson and Matthew Davies write for International Financing Review. “The industry has for years been trying to convince Aa1/AA+ rated Apple to join the rest of the world’s major tech companies and take debt on to its books.”
“After seeing scores of other companies issue debt to fund share buybacks, with little impact to their funding costs or ratings, Apple is believed to have mandated Goldman Sachs in January to lay the documentation and ratings groundwork for a deal, the proceeds of which were to help to fund a US$100bn capital reward for shareholders, including a US$60bn share buyback over the next three years,” Robinson and Davies write. “The decision to come to market coincided with signs that some of Apple’s business segments were maturing, as well as the fact that, with central banks flooding the market with liquidity, record-low funding costs made issuing debt a tantalising alternative to dipping into its US$145bn of cash, about US$102bn of which is held offshore.”
Robinson and Davies write, “Doing a deal of such size in one day is a challenge in itself. The deal attracted 2,000 orders from 900 investors, amounting to a record US$50.2bn, for six separate tranches spanning three-year and five-year fixed and floating-rate notes, plus 10-year and 30-year fixed-rate bonds. ‘It required a lot of preparation, a lot of planning, organisation and team work to make it look as smooth as it did,’ said Jonathan Fine, head of US investment-grade debt syndicate for Goldman Sachs… Certainly, the deal was a resounding success. The leads priced and sized the deal to a tee, as evidenced by its after-market trading, which saw all tranches tighten by a few basis points.”
Read more in the full article here.
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