Apple Has $200 Billion In Cash – But It’s Borrowing $7 Billion Anyway

In a sign of the times, a company that’s sitting on some $200 billion in cash is borrowing $7 billion in a five-part offering that includes a 30-year note yielding 1.03% over Treasurys.

That company: Apple, which tapped BofA, Deutsche and Goldman to manage the sale, its first in two years.

Here are the details:

  • $1b 3Y Fixed (Sept. 11, 2022) at +35
    • Guidance +35#, IPT +55 area
    • Coupon: 1.70%
    • MWC
    • See security information: 3Y Fixed
  • $750m 5Y Fixed (Sept. 11, 2024) at +53
    • Guidance +55a (+/-2), IPT +70 area
    • Coupon: 1.80%
    • 1-month par call, MWC
    • See security information: 5Y Fixed
  • $2b 7Y Fixed (Sept. 11, 2026) at +68
    • Guidance +70a (+/-2), IPT +87.5 area
    • Coupon: 2.050%
    • 2-month par call, MWC
    • See security information: 7Y Fixed
  • $1.75b 10Y Fixed (Sept. 11, 2029) at +78
    • Guidance +80a (+/-2), IPT +100 area
    • Coupon: 2.20%
    • 3-month par call, MWC
    • See security information: 10Y Fixed
  • $1.5b 30Y Fixed (Sept. 11, 2049) at +103
    • Guidance +105a (+/-2), IPT +125 area
    • Coupon: 2.950%
    • 6-month par call, MWC
    • See security information: 30Y Fixed

Apple is hardly alone. Issuance clocked in at more than $50 billion over Tuesday and Wednesday, more than the estimated $40 billion that was seen coming to market for the entire week. 21 IG corporates priced 39 tranches on Tuesday.

“Company treasurers are coming back from summer vacation and having a look at the massive decline in yields over past couple of months”, Kevin Muir, of Macro Tourist fame, said. “Their reaction? Pull out the pink tickets”.

Investment grade yields have plunged of late, falling below 2.80% to near record lows.

“As expected the floodgate to US IG new issuance opened with $25.5 billion priced across 20 companies”, BofA’s Hans Mikkelsen wrote Tuesday, recapping the first day of the post-Labor Day deluge.

He went on to note that while Tuesday did break the previous record for daily issuer count (the old record was 17) it was “only half the $51.5 billion record volume priced on September 11, 2013”.

Additionally, Mikkelsen called Tuesday’s dollar-volume “very much in the ballpark of what we typically see after Labor Day”.


Meanwhile, as illustrated in the right pane, supply now seems geared towards refinancing given rock-bottom rates, as opposed to levering up. Nearly $19 billion of Tuesday’s issuance “included commercial paper, term loan, short and long-term debt refinancing in the use of proceeds language”, BofA noted yesterday evening.

In the same vein, Bloomberg writes that Apple’s $7 billion sale helps the company refinance some $2 billion of debt coming due this year “in addition to much of the $10 billion it has coming due in 2020”.


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3 thoughts on “Apple Has $200 Billion In Cash – But It’s Borrowing $7 Billion Anyway

  1. I would like an explanation of why Apple is paying any premium over Treasurys. It is the equivalent of a G20 country with a New Zealand worth of cash reserves. It could create its own digital currency within weeks, and if you had to bet your kids, which entity would you wager will redeem its obligations anywhere close to real face value in 2049?

  2. Meanwhile, trillions of useless student loan dollars are quietly gathering interest at 6% rate with politicians simply pushing the doomsday scenario forward. And one wonders how QE didn’t trickle down to the working class level

  3. Poor liq­uid­ity = harder to buy or sell as­sets on demand (dif­fer­ence be­tween buy & sell prices in open mar­ket can be so far apart that fair level isn’t clear, or there can be too few con­tracts of stocks or de­riv­a­tives avail­able to buy or sell at de­sired price
    Posted by Liz Ann Sonders on Twitter

    I thought it was interesting as you penned an article about two years a go on liquidity (lack of) in time of urgency.

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