Apple Inc. completed a US$12 billion bond offering Tuesday, an effort led by Deutches Bank and Goldman Sachs, according to Bloomberg. Reuters reported that Apple issued three, five, seven, and 10-year fixed rate notes along with three-year and five-year floaters.
Reports on Monday said that Apple might tap the European bond markets for the offering, but it ended up doing so in the U.S. after all. The company might make another offering later, however, as Apple CFO Luca Maestri said that his company was planning on matching 2012's $17 billion bond offering this year.
Like every other product launch for Apple, Demand for the bonds outstripped supplies. According to Reuters, there was between $35 and $40 billion in orders for the $12 billion offering. Apple was offering 3.45 percent, or roughly 77 basis points (0.77 percentage points) above government rates. In other words, investors gobbled it up.
Apple plans on using the money for increased dividends and share buybacks. While Apple has some $150 billion in cash, 88 percent, or $132 billion, is overseas. Borrowing money at 3.45 percent costs much less than paying 35 percent in taxes to bring the money it already has to the U.S.
Shares of $AAPL ended the day lowers at $592.33, down $1.76 (-0.30 percent), on volume of 12 million shares trading hands.
*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.