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Hi-Grade: Apple Extends Epic 2017 Bond Issuance Run with $5B Print

Apple (Nasdaq: AAPL) today placed $5 billion of senior notes in its fourth benchmark offering of the year, across $1 billion of 1.5% two-year notes due Sept. 12, 2019 at T+25; $1 billion of 2.1% five-year notes due Sept. 12, 2022 at T+48; $2 billion of 2.9% 10-year notes due Sept. 12, 2027 at T+85; and $1 billion of 3.75% 30-year bonds due Sept. 12, 2047 at T+110. The notes were inked 12.5–15 bps through initial whispers.

Last year, Apple’s U.S. bond offerings totaled an outsized $22.5 billion over the full 12-month period, and today’s offering moved Apple’s 2017 total north of that, to $23 billion. Apple had already inked a $1 billion, “no-grow” offering on June 13 of 3% 10-year “green” senior unsecured bonds due June 20, 2027 at T+82, after larger-scale offerings this year in February ($10 billion in nine parts) and May ($7 billion in six parts), which furthered the steady debt financing of the company’s now $300 billion capital-return program, while also addressing a quickening cadence of debt maturities. Apple also inked $1 billion of Formosa bonds in February, €2.5 billion of notes in May, and C$2.5 billion of 2.513% notes due Aug. 19, 2024 last month, the latter representing the biggest single tranche of debt placed buy a foreign issuer on Canada’s Maple bond market.

For reference, Apple 2.3% notes due May 11, 2022 traded on Friday at T+39, or a G-spread of 44 bps (before accounting for roughly two basis points on the curve), from pricing in May at T+45. The 3.2% notes due May 11, 2027, which were priced at T+85, traded last week and today near T+80, and the 4.25% bonds due Feb. 9, 2047, which were placed in February at T+115, traded late last week at T+105, and today at T+112.

As with previous offerings, proceeds will be used for repurchases of the company’s common stock and payment of dividends under its program to return capital to shareholders, and as funding for working capital, capital expenditures, acquisitions and repayment of debt, filings show.

Apple’s ever-expanding capital returns program was boosted again in May, including $35 billion added to the share-repurchase plan (now $210 billion) and 10.5% added to the dividend payout. The total size of the capital-return scheme is $300 billion through March 2019 (the horizon was extended by four quarters), and S&P Global Market Intelligence back in May had estimated roughly $56 billion remaining under that plan.

The outlook remains stable across the AA+/Aa1 ratings profile. “Despite the maturing smart phone market, we expect Apple to generate revenue growth near the mid-single digits in fiscal 2017. We believe the 10th-anniversary edition of the iPhone, expected to launch later this year, will spur further growth into fiscal 2018,” S&P Global Ratings stated in June, noting a third-quarter revenue rise of 7% to $45.4 billion on growth in iPhone, Mac and iPads, as well as a 22% expansion in services, offset continued weakness in Greater China. Terms:

Issuer Apple Inc.
Ratings AA+/Aa1
Amount $1 billion
Issue SEC-registered senior notes
Coupon 1.500%
Price 99.914
Yield 1.544%
Spread T+25
Maturity Sept. 12, 2019
Call make-whole T+3
Px Talk guidance T+25 (the number); IPT T+37.5 area
Issuer Apple Inc.
Ratings AA+/Aa1
Amount $1 billion
Issue SEC-registered senior notes
Coupon 2.100%
Price 99.882
Yield 2.125%
Spread T+48
Maturity Sept. 12, 2022
Call make-whole T+7.5 until notes are callable at par from one month prior to maturity
Px Talk guidance T+50 area (+/- 2 bps); IPT T+62.5 area
Issuer Apple Inc.
Ratings AA+/Aa1
Amount $2 billion
Issue SEC-registered senior notes
Coupon 2.900%
Price 99.888
Yield 2.913%
Spread T+85
Maturity Sept. 12, 2027
Call make-whole T+15 until notes are callable at par from three months prior to maturity
Px Talk guidance T+87.5 area (+/- 2.5 bps); IPT T+100 area
Issuer Apple Inc.
Ratings AA+/Aa1
Amount $1 billion
Issue SEC-registered senior notes
Coupon 3.750%
Price 99.429
Yield 3.782%
Spread T+110
Maturity Sept. 12, 2047
Call make-whole T+17.5 until notes are callable at par from six months prior to maturity
Trade Sept. 5, 2017
Settle Sept. 12, 2017
Books BAML/DB/GS
Px Talk guidance T+112.5 area (+/- 2.5 bps); IPT T+125 area
Notes proceeds for share repurchases and payment of dividends under its program to return capital to shareholders, and GCP including funding for working capital, capital expenditures, acquisitions, and repayment of debt

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