Apple to sell $5bn of debt to fund buybacks, dividends

2017-09-07 10:36 - by Molly Smith, Bloomberg
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(File, AFP)

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New York - Apple is selling bonds again to finance its current round of share buybacks and dividends.

The iPhone maker is offering $5bn of debt in four parts, after dropping a two-year floating rate component, according to a person with knowledge of the matter.

The longest portion of the sale, a 30-year security, may yield 1.1 percentage points above Treasuries, down from initial talk of around 1.25 percentage points, said the person, who asked not to be identified because the deal is private.

Apple is about three-fourths of the way through a program that’s returning $300bn of capital to shareholders by the end of March 2019.

At the start of July, the company was sitting on more than $261.5bn of cash - 94% of which was outside the US, Chief Financial Officer Luca Maestri said on an earnings call. The Cupertino, California-based company declared a regular quarterly dividend of 63 cents a share last month.

The bond sale comes a week before Apple is scheduled to announce successors to the iPhone 7 and iPhone 7 Plus during a launch event at its new campus.

The latest model is said to eliminate the home button, a key feature since the gadget was introduced a decade ago, and introduce upgrades such as a face-recognition scanner, Bloomberg reported last month. The iPhone is Apple’s biggest product, responsible for about two-thirds of sales.

Apple, selling debt for at least the seventh time this year, is joined by a host of other issuers following the lull that led up to the US Labour Day holiday. Home Depot is selling $1bn of investment-grade debt today, and International Business Machines is in the market with a five-part deal. Apple sold C$2.5bn in its first Canadian maple bond deal last month.

Goldman Sachs, Bank of America and Deutsche Bank are managing the latest bond sale, Apple said in a filing.

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