Apple Inc. is an extremely innovative, profitable multinational corporation, headquartered in Cuperlino California. Apple Inc.’s main operations include designing, developing, and selling top of the range, but generally affordable computer software, online services, and personal computers. Apple Inc. was founded in 1976 by Steve Jobs, Steve Wozniak, and Ronald Wayne. In 2013 Apple had a revenue of $170.91bn and has total assets of $207bn (Apple Inc. annual report, 2013/2014). Cherney (2014) writes an interesting article portraying Apple’s return to the bond market in 2014. In April 2014 Apple completed its second blockbuster bond sale in a year. Apple sold $12bn of debt of varying maturities at interest rates that were mostly less than a percentage point above comparable U.S. Treasury debt (Cherney, 2014). This sale goes a long way in highlighting the faith in the prospects of Apple. The offering was extremely tempting for investors whom flocked to place more than $40bn in orders (Cherney, 2014). The bonds sold Tuesday offered interest rates relative to Treasurys that were similar to last year's sale. For example, a 10-year bond from Apple on Tuesday was priced to yield 0.77 percentage point more than comparable Treasurys. Last year, Apple priced 10-year bonds to yield 0.75 percentage point more (Cherney, 2014). In all, Apple sold fixed-rate bonds maturing in three, five, seven, 10 and 30 years, and were priced to yield 1.068%, 2.108%, 2.889%, 3.460% and 4.483%, respectively (Cherney, 2014). Deutsche Bank AG and Goldman Sachs Group Inc. led the sale. The head of ‘investment grade credit at Invesco, Chuck Burge describes how “Apple’s bonds are an attractive alternative to Treasury bonds.” He goes on to suggest that the reason they are so popular is due to their past strong performance, and the fact that everyone knows of Apple and has become very trustworthy of the brand name. Invesco spent $100million on...
References: Cherney, M., (2014). Apple Returns to Bond Market. The Wall Street Journal. New York, NY
Worstall, T., (2013). With all of Apple’s Cash, Why is it Issuing Bonds? Forbes. New York, NY
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