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Apple Plans to Issue $6.5 Billion of Bonds in Four Parts

Proceeds from Apple's bonds will go to general corporate purposes, including share repurchases and dividend payments.
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Apple  (AAPL) - Get Apple Inc. (AAPL) Report plans to sell $6.5 billion in bonds through four different notes, according to papers filed with the Securities and Exchange Commission Thursday.

Apple said it may sell four different notes, ranging in maturities from seven to 40 years. 

The proceeds will be directed to "general corporate purposes, including repurchases of our common stock and payment of dividends under our program to return capital to shareholders, funding for working capital, capital expenditures, acquisitions and repayment of debt."

TheStreet.com founder Jim Cramer said a successful long-bond offering would allow Apple to "buy back an insane amount of stock".

Apple is rated Aa1 by Moody's Investors Service, its second-highest grade, while Standard & Poor's rates the tech giant at AA+. Only Microsoft  (MSFT) - Get Microsoft Corporation (MSFT) Report and Johnson & Johnson  (JNJ) - Get Johnson & Johnson (JNJ) Report, both triple-A credits, have a higher rating than Apple.

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The longest maturity of the offering -- 40-years -- is slated to yield 0.92 percentage point above Treasuries, a source told Bloomberg.

The 30-year Treasury recently yielded 1.91%. It’s unclear if there are any 40-year Treasuries outstanding. The 40-year high quality market corporate bond spot rate stood at 3.33% in June.

This would be the fourth Apple bond offering since May 2020, Bloomberg reported. The company issued $14 billion of bonds in February.

Apple shares recently traded at $145.70, up 0.5%. They have gained 9% over the past three months amid strong financial performance. But there is concern Apple won’t be able to sustain its torrid growth pace.

Apple posted much stronger-than-expected earnings for the June quarter Tuesday. Apple shares rose 0.46% Thursday to close at $145.64.

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