Apple Inc. (AAPL) - Get Apple Inc. (AAPL) Report moved higher Thursday after the world's most-valuable tech company filed plans to raise billions in the bond market that could be used to boost shareholder returns.
In papers filed with the Securities and Exchange Commission Thursday, Apple said it may sell four different notes, ranging in maturities from seven to forty years, with proceeds 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."
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 and Johnson & Johnson, both triple-A credits, have a higher rating than Apple.
TheStreet's founder, Jim Cramer, said a successful long-bond offering, priced at a yield premium to U.S. 30-year Treasury bonds, would allow Apple to "buy back an insane amount of stock".
Apple shares were marked 0.67% higher in mid-day trading Thursday to change hands at $145.95 each.
Apple raised $8.5 billion in a four-part bond sale last year that included maturities of 2030 and 2050, with coupons ranging from 0.75% for their three-year paper and just 1.75% for their benchmark 10-year notes.
Since then, it has tapped the market three more times -- not including today's plans -- including a $14 billion sale in February.
Cash flow to cover the borrowed money isn't likely to be a problem: Apple notched $84.1 billion in June quarter revenues, with a 43% gross margin, as part of a record report that included 50% surge in iPhone sales and an all-time high in services revenues.
Apple said it sees "very strong double digit year over year revenue growth during the September quarter", but noted it would be slower than that 36% gain recorded over the three months ending in June, which lifted the tech giant's top line to a Street-blasting $81.4 billion.
Supply constraints, Apple said, would likely hit both the iPhone and the iPad in terms of sales, as a shortage in global semiconductors blunts its ability to meet "jaw-dropping" consumer demand. The hit will trim a bit more than $3 billion from September quarter revenues, Apple said, modestly higher than the impact it forecast for the prior period.