Apple (AAPL) stunned the debt markets on Tuesday with the biggest ever non-financial corporate bond deal in history. In a record-sized offering that saw investors trip over themselves to buy in, Apple raised $17 billion while borrowing at rates nearly as low as the highest-rated triple-A firms in the world. According to Bloomberg News, the order book for Apple’s offering, a gauge of investor demand for the debt, reached a whopping $50 billion.
“This is a bust-down-the-door deal,” Marilyn Cohen of Envision Capital Management was quoted as saying by the LA Times. “I’ve been doing this for over 30 years, and I’ve never seen anything like this.”
The iPhone-maker borrowed [via The WSJ] $5.5 billion for 10 years at an annual yield of 2.415 percent. It also issued three-year debt at 0.511 percent. Other yields included 1.076% on a five-year debt, and 3.883 percent on a 30-year debt. The 3-year and the 5-year floating rate notes were priced at 5 and 25 basis points above Libor rate, respectively. The 3-month Libor was last set at 0.2731%.
Apple is borrowing not because it has to ; the company has amassed a cash hoard worth $144 billion as of the first quarter. But since those cash reserves (more than $100 billion) are largely held overseas, raising dollars in the bond market helps Apple avoid the big tax bill that would hit if the company repatriated its cash.
Apple’s stock rose $12.66, or 2.94 percent, to $442.78 Tuesday / May 1, 6:52AM EDT pre-market: up $1.16 at $443.94.