Apple's $17B six-part bond offering is largest in history [u]Apple will sell $17 billion in debt in its first bond offering since 1996, as the company borrows funds to fuel its $100 billion capital rewards program.
Update: Apple's bonds will amount to $17 billion, it was confirmed later on Tuesday by The Wall Street Journal. That number is in fact a new dollar amount record for a U.S. corporate offering.
The iPhone maker is planning to issue date with floating-rate notes maturing in 2016 and 2018, along with fixed-rate bonds with interest dates in 2016, 2018, 2023 and 2043, Apple revealed in a 424(b)(2) filing filing with the U.S. Securities and Exchange Commission on Tuesday.
There is strong demand for Apple bonds, which could allow the company to sell as much as $20 billion in debt, Tom Tucci of CIBC World Markets Corp. told Bloomberg. If Apple were to reach that number, it would be the largest dollar-denominated offering in history.
Apple has $145 billion in cash, but a majority of those funds are overseas and would need to be repatriated according to U.S. tax laws in order to be used for share repurchases. As a result, Apple has instead opted to borrow, in addition to using its domestic cash, to fund its $100 billion capital rewards program.
While Apple's bond sale could become the largest in history, the company's share repurchase authorization plans are already record setting. Apple plans to repurchase $60 billion in shares through the end of calendar 2015, accounting for the bulk of its $100 billion capital initiative.
The remaining money will be used by Apple's quarterly dividend, which was bumped 15 percent last week to $3.05 per common share.
"We are very fortunate to be in a position to more than double the size of the capital return program we announced last year," Apple CEO Tim Cook said in a statement. "We believe so strongly that repurchasing our shares represents an attractive use of our capital that we have dedicated the vast majority of the increase in our capital return program to share repurchases."
On Topic: Investor
- Apple shares hit all-time high above $118 as market cap flirts with $700B
- Morgan Stanley raises Apple price target to $126, says investors underestimate Apple Watch
- Strong demand for iPhone 6 & 6 Plus persists, prompts Piper Jaffray to raise Apple price target to $135
- Evercore ups Apple target to $135, expects revenue growth to accelerate to 15% in 2015
- Top hedge funds predict Apple could achieve trillion-dollar market cap