Apple Inc., the iPhone maker seeking to help finance a $100 billion capital reward for shareholders, is selling $17 billion of bonds in the biggest U.S. corporate offering on record.
Apple is issuing $3 billion of floating-rate notes and $14 billion of fixed-rate securities in six parts with maturities from three to 30 years, according to a person familiar with the offering. Proceeds may help the company avoid repatriation taxes on its $102.3 billion of funds held overseas as Chief Executive Officer Tim Cook returns an additional $55 billion to shareholders through 2015 to compensate for a stock that’s been hammered by signs of slowing growth.
“You’ll see a meaningful amount of interest,” Ashish Shah, the head of global credit investment at New York-based AllianceBernstein LP, which oversees $256 billion in fixed- income assets, said in a telephone interview. “It’s a high- quality name which brings in a lot of different kinds of buyers.”
The offering, Apple’s first since 1996, is being managed by Goldman Sachs Group Inc. and Deutsche Bank AG and follows a $1.95 billion dollar sale last week from Microsoft Corp. The world’s biggest software maker issued $1 billion of 10-year, 2.375 percent securities to yield 70 basis points more than Treasuries, according to data compiled by Bloomberg. They traded yesterday at 100.2 cents on the dollar to yield 2.35 percent, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
Apple’s offering would be the largest dollar-denominated sale on record. Roche Holding AG tops the list with a $16.5 billion six-part deal from February 2009 that included $3 billion of one-year floating-rate debt, followed by AbbVie Inc.’s $14.7 billion six-part issue in November, Bloomberg data show.
“There’s strong demand for bonds across the board,” Anthony Valeri, a market strategist with LPL Financial Corp. in San Diego, which oversees $350 billion, said in a telephone interview. “When you bring in a new name to a starved market I think it will be well received.”
The order book for Cupertino, California-based Apple’s offering, a gauge of investor demand for the debt, reached $50 billion, a person familiar with the transaction said.
Average yields on investment-grade debt worldwide dropped to a record-low 2.45 percent yesterday from 3.37 percent a year ago, according to Bank of America Merrill Lynch’s Global Corporate Index.