Apple announces first sterling-denominated bond valued at $2B US
In a filing with the U.S. Securities and Exchange Commission on Friday, Apple announced its first-ever sterling-denominated bond issuance set at 1.25 billion pounds, or nearly $2 billion.
The debt offering, detailed in a free writing prospectus supplementing Apple's massive 2013 bond sale, consists of two notes, one set at 750 million pounds maturing on July 31, 2029, and another at 500 million pounds due on the same day in 2042. Interest payments on the 12- and 17-year notes are semi-annual on Jan. 31 and Jul. 31 of each year, set to commence in 2016 .
Apple's bonds are supported by Goldman, Sachs & Co., Merrill Lynch International, HSBC Bank, Deutsche Bank's London Branch and J.P. Morgan Securities and achieved Aa1 and AA+ ratings by Moody's and Standard & Poor's, respectively. Barclays Bank, Lloyds Bank and The Royal Bank of Scotland are named as co-managing institutions.
As its overseas cash hoard balloons to more than $190 billion, Apple has increasingly taken to debt markets in a bid to raise funds for a domestic capital returns program. The company could use its international reserves to repurchase stock, but is reluctant to repatriate funds due to high U.S. tax rates. Multiple tech firms based in the U.S. face similar issues and are also seeing their overseas cash piles grow.
Apple previously offered bonds in the both U.S. dollars and Euros, but more recently showed heightened interest in low rate zones in Asia and Europe. In June, for example, Apple raised $2 billion in yen-denominated bonds, which followed a smaller offering in Swiss franc-denominated offering in February.
Apple plans to return $200 billion to shareholders through dividends and stock buybacks by the end of March 2017.