The $17 Billion Apple Bond….potential losses

In April this year, Apple raised US$17 Billion, by issuing bonds. They were raising cash as a part of a programme to return cash to shareholders via the most tax efficient process.
The issue was done in 6 blocks (parts), these offerings from Apple included benchmark maturities of three-year, five-year, 10-year and 30-year fixed rate bonds, along with three-year and five-year floating rate notes.

Now what is curious, and not widely reported (you have a dig a bit to find it, all public), that the 30 year bond issue was for $3 billion is now underwater.
Issued with an interest rate of 3.85%.

At issuance it is worth 100 Cents on the Dollar.

Today  nearly 5 months on after issue, the 30 year Apple bond is trading on the bond market (fixed income) at about 95 Cents on the Dollar. Yes.

So now with these bonds that are traded are worth $2.85 Billion.
Thus investors are now nursing paper losses on these bonds. Incredible.

Leave a Reply

Your email address will not be published. Required fields are marked *