Apple Launches $17 Billion Bond Offering: Largest Ever For Non-Financial Firm

Tyler Durden's picture

And there it is. Moments ago Bloomberg disclosed the final terms of the just launched Goldman-led syndication of AAPL paper. The total size: $17 billion, which surpasses the previous record set by Roche at $16.5 billion, and makes it the biggest corporate bond synidcation in history. The breakdown:

  • $1B 3Y FRN LAUNCH AT 3ML + 5 BPS
  • $1.5B 3Y FIXED NOTES LAUNCH AT + 20 BPS
  • $2B 5Y FRN LAUNCH AT 3ML+25 BPS
  • $4B 5Y FIXED NOTES LAUNCH AT + 40 BPS
  • $5.5B 10Y FIXED NOTES LAUNCH AT +75 BPS
  • $3B 30Y DEBT LAUNCHES AT +100 BPS

30 Year paper in a tech company whose market cap has fluctuated by roughly $500 billion in the past year, and yielding just under 4%?

Sold to you.

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Salah's picture

OK, they're ringing a bell here, boys & girls....we've seen the high water mark in the great bond bubble of 2007-2013.

camaro68ss's picture

need MOAR money to sell MOAR Ipads

NotApplicable's picture

Is it a new?

A) Perpetual-motion machine?

B) Tail to wag the dog?

C) Money laundering operation?

D) All of the above?

bania's picture

No, just using the proceeds to buy gold/silver bullion and stick it in the basement of that new spaceship shaped head office.

mootsman's picture

They will use the proceeds to exchange for the ships hovering capabilities.  Being suspended 300ft above the earth should ensure they have soviergnty from the implosion of California.

mootsman's picture

They will use the proceeds to exchange for the ships hovering capabilities.  Being suspended 300ft above the earth should ensure they have financial sovereignty from the fiscal implosion of California.

SilverRhino's picture

Launch a bond in the USA to raise operating capital in the US because they cant repatriate $$$ from overseas without paying taxes on it.   

The additional capital overseas on the books offsets the appearance of debt and the stock still looks good.   

Did I miss anything? 

 

Common_Cents22's picture

when apple comes out w/ iGold, sell sell sell!

ReallySparky's picture

Not sure that is the case.  I think they have the mistaken perception that they can buy the federal government with all that cash, only problem is the current owners are not selling.

true brain's picture

Why are they borrowing when they have 100 billions in cash? and what will this do to the cashback program? doesn't make any sense? Unless they're counting on further currency debasement. Must have gotten the private Bernanke memo.

Dr. Engali's picture

I answered this question a little further up so I'm sorry for the double post.  

 

They don't have to repatriate the billions in cash and pay taxes on it. Instead they leverage the company out to pay a dividend and buy back shares. The sheeple get a few bips and squiddy makes a mint.

Divided States of America's picture

As well, AAPL's cash is invested in a hedgefund Braeburn Capital....given how the returns of that fund is, its probably invested in illiquid shit. Apple's strong financial position is a mirage and will disintegrate quickly if the markets tank big.

 

http://www.cultofmac.com/193692/the-mysterious-company-that-manages-appl...

eclectic syncretist's picture

In effect they don't have cash and need it now.  That's why you do an offering.  It's definitely not because things are going well.  And in the past few days we have Apple, US airways, Margin Stanley, Dish Network, JP morgan, Verisign, Rosetta, Microsoft, and Walmart, just to name a few, that have announced they need cash and are going to issue bonds.  Everyone needs cash suddenly.  Not good.

Agent P's picture

Cash is overseas and expensive to repatriate, whereas cash at home is cheap to borrow.  +100 for 30yrs in today's rate environment, for a hardware manufacturer in the fickle consumer mobile market...that is fucking insane!

LawsofPhysics's picture

Why?  Simple, repatriation of their cash is more costly (because of the taxes) then issuing the bond.  Fucking duh!  At least you know they have the fucking cash to pay back any money you lend them.

ChanceIs's picture

OK.  All good points about repatriating the cash overseas, but........

Life is hard in the tech world.  You have a lot of competition and need to reinvent yourself every nine months.  Soooooo....why not do as so many before you have done.

Financialize!!!!!

Remember all of those great old line companies which turned to real estate speculation: General Electric, General Motors, hmmmmmm.  I am sure that there are others.  It is ever so easy to turn those departments intended to finance the sale of one's own product into ..... well....real estate holding companies.  And it never goes down.

So it is with Apple.  Sell those bonds at the top intending to purchase then back at half off when the bond market tanks.

Remember the good old days when Angelo Mozilla was issuing debt during the middle of the real estate crash to buy Countrywide stock - because he had options on it.  You know....sell debt when it is cheap to buy stock back when it is dear - and leave the company with a huge debt service burden.  One of the few people I want to see in jail more than Jon Corzine.

At least if Apple turns around and buys its own stock, it won't have done it at the top.  And here it has sold debt at the top.  Not a total abortion.  Oh wait.  Why is it again that they didn't issue new stock at $700 as opposed to today $450ish?  I mean...this financing need grew up overnight, right?

slaughterer's picture

The iBond deal is really well engineered.  I do not see a problem here.  

SheepDog-One's picture

I have a bucket of rusty old bolts here....I wonder if Goldman wants to under write that for a few $billion worth of 30 year bonds?

fonzannoon's picture

"30 Year paper in a tech company whose market cap has fluctuated by roughly $500 billion in the past year, and yielding just under 4%? "

and i'd still take it over a 30yr ust

Ahmeexnal's picture

wrong. chances of the "big one" occurring during the next 30 years are too high. Apple should have built it's new campus in Montana, not directly over the San Andreas fault.

Zer0head's picture

Have you heard of the Yellowstone Caldera?

 

there is nowhere to escape, we are doomed http://volcanoes.usgs.gov/observatories/yvo/index.html

Dr. Richard Head's picture

Not doomed, just a well deserved rest for us all.  ; )

NotApplicable's picture

On a long enough timeline...

SheepDog-One's picture

On a REALLY long enough timeline, the whole earth will be consumed by the sun so technically all of this we do every day is just wanking.

TBT or not TBT's picture

No, we are living in a simulation.   I'm determined bunch of code who just might win this thing, aren't you?

firstdivision's picture

Insurance payment is considered revenue.

kito's picture

Fonz, I read your post in the first apple story today...I'm thinking there will be a series of heart attacks in America over the next 7 year's that will continually weaken the country.....next coronary will be 2015.....apple makes touch screen devices......that's it...their operating system is nothing special next to Google's.....they will not be the dominant player in 5 years.....

fonzannoon's picture

i guess i should clear this up, I would never own either. If i had to choose I like their balance sheet better than the treasury.

Winston Churchill's picture

Suckers.

Marginally better that a 30yr UST at this point .SOL rated.

Racer's picture

So they borrow money so they don't have to repatriate the money to pay a proper rate of tax.... dirt cheap amount to pay at 4%!

rosiescenario's picture

That was my first thought when I saw this offering....

KnightTakesKing's picture

... so they don't have to repatriate the money to pay a proper rate of tax.

So, what's a "proper" rate of tax? They already paid taxes in the countries that the profits were earned. Why should they be double taxed?

 

UK debt marsh's picture

The average corporate lasts 12 years.

In 30 years time Apple won't exist.

ParkAveFlasher's picture

I'd love to see how bond holders figure on the subordination "pyramid" in the event of some corporate calamity.

Mercury's picture

Above the equity holders whose dividend these issues will be funding.

ParkAveFlasher's picture

I'm guessing CBs will suddenly start to diversify into corporate bonds very soon then, starting with Apple.

Eventually, it has to get back to the taxpayer.  The taxpayer is quite helpless.  In this case the rapists would penetrate via both the front and back doors. 

McMolotov's picture

In 30 years time, Google, Amazon, and Apple will have merged to form Gamazoople...

q99x2's picture

They may be around to pay back the 3 year.

Dr. Engali's picture

Fucking sickening. All that cash they are sitting on and they leverage the company up  just to have the pleasure of sucking squiddy's dick. 

Bay of Pigs's picture

It is kind of remarkable isn't it Doc?

Dr. Engali's picture

I would say yes, but sadly nothing surprises me any longer with these greedy bastards.

Bay of Pigs's picture

Im just wondering why the people running AAPL feel the need to do this nonsense when they don't need the money. 

Dr. Engali's picture

They don't have to repatriate the billions in cash and pay taxes on it. Instead they leverage the company out to pay a dividend and buy back shares. The sheeple get a few bips and squiddy makes a mint.

rosiescenario's picture

Share buyback makes the management options valuable....