Apple follows up ‘resilient’ earnings, swift iPhone sales with debt deal that could reach $6.5 billion

Apple Inc., fresh off upbeat quarterly results tied to robust iPhone sales, rolled out a four-part bond deal on Monday to raise new debt.

The new deal from Apple AAPL,
could raise up to an estimated $4 billion to $6.5 billion for the technology giant through the issuance of four series of bonds with ratings of AAA from Moody’s Investors Service and AA+ from S&P Global, according to Informa global markets.

“Even though August is typically a slower issuance month,” said Tom Murphy, head of investment grade credit at Columbia Threadneedle Investments, “we estimate this year could be busier.”

Murphy pointed to improved conditions for borrowers in the past month, but also ongoing macro uncertainties as potential catalysts for more robust issuance from highly rated US companies in August.

The US investment grade bond index rallied to a negative 11.6% total annual return to end July, an improvement from its -16.1% performance in mid-June, he said.

Robust iPhone sales have also been a bright spot of quarterly corporate earnings so far, with some Wall Street analysts dubbing Apple’s earnings “resilient” in the face of soaring prices for gas, groceries, vehicles, shelter and more.

Read: Big Tech survived the earnings test, but many more tech companies are picking up their pencils

Signs of buckling consumer demand were found in earlier quarterly results from Walmart Inc. WMT,
and others. Companies like Facebook parent Meta Platforms Inc. WHEN,
also reported declining income as US households juggle soaring costs and recession fears as the Federal Reserve works to tame inflation running at a four-decade high.

For investors, the Apple debt deal, split across 7-year, 10-year, 30-year and 40-year classes of bonds, comes after a historically bad start to 2022 that has left many corporate bonds trading with steep discounts.

Initial price talk on the bonds ranged from 90 basis points to 150 basis points above the risk-free Treasury rate, according to a CreditSights report, which also noted that the iPhone accounted for 52% of Apple’s sales in the past 12 months through its fiscal third-quarter.

Proceeds from the sale of bonds will be used by Apple for general corporate purposes, including stock and bond repurchases and dividend payments.

Apple did not immediately respond to a request for comment.


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