Apple has sold seven-year bonds worth C$2.5 billion in what has become the largest single debt offering in Canadian dollars by a foreign company. The debt offering by the Cupertino, California-based tech company is expected to fund dividends and stock buybacks.
The coupon rate for the senior unsecured notes was 2.513% and the yield is 81.4 basis points above the government benchmark. Sources said that the target for the iPhone maker was to raise a minimum of C$1.5 billion.
Biggest single-tranche deal
This is Apple’s first Canadian bond sale and in the Maple bond market it is also the biggest single-tranche deal. Earlier in the year Anheuser-Busch InBev raised C$2 billion in a two-part sale. Since 2007 this year has been one of the busiest for debt being sold in Canadian dollars by foreign issuers as C$12.7 billion has already been raised. Some of the active debt issuers across the globe have been technology companies. This includes Tesla which issued a debut bond last week and Amazon which sold bonds worth $16 billion this week.
“To be able to buy an issuer of this quality and a well-known entity in Canadian dollars is a very easy decision for most investors to make,” said HSBC Bank Canada’s managing director and debt syndication head, Bradley Meiers, in an interview with Bloomberg.
This is the sixth time that Apple is issuing bonds following the issuing of $18 billion in three sales in the United States. Apple also sold debt worth $1 billion Taiwan which was offered in notes that were euro-denominated. In the earnings report the world’s largest public company by market capitalization disclosed that revenue for the current quarter is projected to come in at between $49 billion and $52 billion. Estimates from analysts are projecting an average of $49.1 billion in revenues.
This positive outlook which has come with reported increases in the sale of services and products in its ‘Other’ category served to calm concern among investors that there was stagnation in the demand for iPhones as the tech giant prepares to launch new models. Consequently shares have soared to record highs.
One of the reasons why international corporate issuers have been attracted to the Canadian debt market is the prevailing low interest rate environment. Investors have also been searching for diversity and yield. Besides Apple and tech companies such as Amazon and Tesla, other international corporate issuers have included United Parcel Service and PepsiCo Inc.