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Apple was finalising plans to borrow between $6bn and $8bn on Thursday after the iPhone maker reported a rebound in revenue growth in its latest quarter, according to two investors and a banker with knowledge of the bond sale.
The funds will be used for general corporate purposes, including share buybacks and the issuance of dividends, according to a filing with US securities regulators, reports Eric Platt in New York.
Apple, which has $246bn of cash on its balance sheet, has turned to debt markets to finance an expanding shareholder return programme. More than 90 per cent of its cash is held overseas by foreign subsidiaries, as it seeks to avoid taxes tied to repatriating that money to the US.
One investor added that he would not be surprised if Apple, a frequent borrower in US and international debt markets, tapped investors for $10bn by the end of the day.
The company was planning to offer notes across nine tenors, including three floating rate notes that mature in 2019, 2020 and 2022. The fixed rate notes span two- to 30-year maturities. Initial price talk on the company’s new 10-year bonds was set at 110 basis points above Treasuries, for a yield of roughly 3.56 per cent.
Apple’s 2026 maturing notes, which it sold last year with a yield of 2.48 per cent, traded hands with a yield of 3.3 per cent on Thursday.
Deutsche Bank, Goldman Sachs and JPMorgan led the offering.
Orders for the sale hit $38bn, allowing underwriters to tighten financing terms on the new debt. The 10-year notes were set to price 90 basis points above the yield on the benchmark 10-year Treasury, below the 110bps earlier marketed.
At that level, the new notes would yield 3.37 per cent, marginally above the group’s existing 2026 notes, which yield 3.3 per cent.