iPhone maker Apple Inc. (AAPL) Tuesday announced the sale of $17 billion in bonds as the technology giant increases return of capital to its shareholders. The stock advanced nearly 3 percent to close regular trading on the day.
The floating rate notes and the fixed rate notes, together called notes, constitute six series of securities. The floating rate notes are due in 2016 and 2018, while the fixed rate notes are due in 2016, 2018, 2023 and 2043.
The notes will be issued in denominations of $2,000 and integral multiples of $1,000. Goldman, Sachs & Co. and Deutsche Bank Securities Inc. are the underwriters to the offering.
Apple plans to use the net proceeds from the sale of notes for general corporate purposes, including share repurchases and payment of dividends under its recently expanded program to return capital to shareholders.
On April 23, the company had announced an increase in its share repurchase program authorization to $60 billion from $10 billion and raised its third quarter cash dividend by 15 percent.
The offering will help Apple, which is sitting on a cash pile of $144 billion, pay its shareholders without having to pay tax if it had to repatriate money parked outside the U.S. to meet this purpose.
Meanwhile, Bloomberg said Apple issued $3 billion in floating rate notes - $1 billion of floating debt due 2016 and $2 billion of floating debt due 2018. The former will pay 0.05 percentage point more than the three-month London interbank offered rate or Libor while the latter pays 25 basis points more than the Libor.
The company issued $14 billion of fixed rate securities with $1.5 billion of 0.45 percent, three-year debt paying 20 basis points higher than Treasuries of similar maturity.
According to the report, $4 billion of 1 percent, five-year notes have a spread of 40 basis points and $5.5 billion of 2.4 percent, 10-year securities have a yield of 75 basis points. The remaining $3 billion of 3.85 percent, 30- year bonds will pay 100.
Apple's is said to be the biggest corporate bond offering on record and its first since 1996. This offering tops the $16.5 billion six-part offering made by Roche Holding AG (RHHBY.PK) in February 2009.
AbbVie (ABBV), spun off from Abbot Laboratories (ABT), had made a $14.7 billion six-series offering in last November.
AAPL rose 2.9 percent on Tuesday to close at $442.78. The stock was marginally higher in the extended trade.
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