“Apple Inc. bondholders are signaling investor Carl Icahn’s appeal for an additional $150 billion in share buybacks is little more than wishful thinking,” Charles Mead reports for Bloomberg.
“While Icahn, who supports funding the transaction with debt, said Oct. 1 that he ‘pushed hard’ for the repurchases during a dinner with Chief Executive Officer Tim Cook, the extra yield creditors demand to own Apple notes instead of Treasuries declined,” Mead reports. “That shows investors doubt the proposal will be adopted with the iPhone maker already returning $100 billion to shareholders in a program that included $16 billion of buybacks last quarter, according to Frost Investment Advisors LLC.”
Mead reports, “The dinner with Cook took place Sept. 30 at Icahn’s apartment in New York, when Apple’s $14 billion of fixed-coupon obligations paid about 75 basis points more than government securities, according to data compiled by Bloomberg. The next day, the world’s 37th-richest person said via Twitter that dialogue would continue in about three weeks, and Apple’s average spread ended yesterday at 72 basis points… ‘The reaction has been muted,’ said David Brown, a money manager who helps oversee about $93 billion of fixed-income assets, including Apple bonds, at Neuberger Berman in Chicago. ‘As of right now, the bond market is pricing a low probability of a massive share repurchase in the short term.'”
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