Apple is leading a busy investment-grade primary on Monday, hitting the market with a US$5.5bn four-part bond deal that included a slug of long-dated tenors.
The iPhone maker is copying its July 2021 financing exercise when it last made a visit to the US corporate bond market. Like then, Apple issued seven, 10, 30 and 40-year maturities.
Extended tenors are in short supply in the new-issue market on Monday. Other than Apple, only utility Consumers Energy is selling a maturity of 30 years or more.
Rated Aaa by Moody's and AA+ by S&P, Apple's new senior unsecured notes launched today through bookrunners Goldman Sachs, Bank of America and JP Morgan, which came in at Treasuries plus 63bp, 78bp, 105bp, and 118bp, respectively. Initial marketing had been set at Treasuries plus 90bp area, 105bp area, 135bp area, and 150bp area.
"Demand for a high quality and liquid name such as Apple will undoubtedly be strong," said BMO analysts in a Monday note.
Apple said funds raised from the bond will go towards general corporate purposes.
CreditSights analysts noted the proceeds could help pay down the electronic manufacturer's near-term debt. This year, Apple had US$2bn of notes maturing in September, and more than US$2bn billion of notes coming due in Australian dollars and euros together. Apple also had US$11bn of commercial paper outstanding in June.
"As such, we do not expect the issuance to have any material impact on gross leverage," they said.
Market participants said the blitz of high-grade issuance on Monday showed how companies had been waiting for long-term Treasury yields to fall and credit spreads to tighten. The 10-year Treasury note yield was at 2.60% on Monday, after getting close to the 3.50% mark in mid-June.
"It seems the source of the supply is mainly opportunistic issuance," Guy LeBas, chief fixed income strategist at Janney Montgomery Scott, said this afternoon.
"Plus, with demand decent at the moment, new issue concessions are thinner, all of which translates into substantially lower funding costs for IG corporates today as opposed to four to six weeks ago."
Updated story: Added launch details