Apple’s latest debt deal could reach $6.5 billion

Apple, following up record quarterly results tied to robust iPhone sales, rolled out a four-part bond deal on Monday to raise new debt in a deal that could reach $6.5 billion.

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Joy Wiltermuth for MarketWatch:

The new deal from Apple could raise up to an estimated $4 billion to $6.5 billion for the technology giant through the issuance of four series of bonds with ratings of AAA from Moody’s Investors Service and AA+ from S&P Global, according to Informa global markets.

“Even though August is typically a slower issuance month,” said Tom Murphy, head of investment grade credit at Columbia Threadneedle Investments, “we estimate this year could be busier.” Murphy pointed to improved conditions for borrowers in the past month, but also ongoing macro uncertainties as potential catalysts for more robust issuance from highly rated U.S. companies in August…

The Apple debt deal, split across 7-year, 10-year, 30-year and 40-year classes of bonds, comes after a historically bad start to 2022 that has left many corporate bonds trading with steep discounts. Proceeds from the sale of bonds will be used by Apple for general corporate purposes, including stock and bond repurchases and dividend payments.

MacDailyNews Note: Apple ended its fiscal third quarter with $179 billion in cash and marketable securities. The company repaid $3 billion in maturing debt while increasing commercial paper by $4 billion, leaving Apple with total debt of $120 billion. As a result, Apple’s net cash was nearly $60 billion at the end of the quarter ended June 30, 2022.

Apple has a goal of becoming net cash neutral “over time,” meaning that the company’s debt balances will roughly offset its cash position when achieved.

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