SHANGHAI, CHINA - SEPTEMBER 17: People crowd to the Nanjing Road Apple Store to buy iPhone series products on September 17, 2016 in Shanghai, China. Apple's iPhone 7 and 7 Plus hit China's market on Friday. (Photo by VCG/VCG via Getty Images)

What Made Apple Borrow Money?

Nowadays borrowing rates are so low that even Apple Inc. can’t hold back, it has become the latest company to join the surge in issuance from the world’s largest technology firms.

Apple, hasn’t borrowed in dollars since once in a calendar year 2017, is entering the investment-grade market second time since May.

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It was cheap then to issue debt and is much better now, with cash-rich firms like Inc. and Google’s parent Alphabet Inc. getting in on the action, outdoing each other to set up a new yield floor.

How is Apple Acquiring the Money?

According to a person with knowledge of the matter, Apple is selling its bonds in four parts. The longest maturity, 40-year security, could yield about 135 basis points above Treasuries, the person said, asking to not be named as the details are confidential.

Apple will be launching subscription packs with new iPhones this October

The debt will certainly come cheaper for Apple than it did for Amazon, which priced over Treasuries at 130 basis points and could probably rival the spread of Google’s 108 basis points.

Outside of tech, Both Visa Inc. and Chevron Corp. set record low rates earlier this week, but for faster maturing bonds.

Positive Pandemic for Big Tech Companies

Big tech has flourished in the pandemic, with customers forced to stay at home and more dependent on their devices and connectivity. These companies had reversed the growth in comparison to other economies like the UK is facing the deepest recession of all the major economy.

The cash piles are near record highs, has given the companies a free hand to borrow for next to nothing in a credit boom. This has favoured corporate America’s biggest companies and left the smaller ones way far behind.


Apple: $2 Trillion Company

Recently Apple hit its market value close to a historic $2 trillion because it is coming off a blowout quarter that has helped fuel a stock surge. Now the company is on a voyage of series of bundles that will let customers subscribe to several of the company’s digital services at a much lower monthly price as compared to now.

Apple will use the money to buy back stock and pay dividends, among other general corporate purposes, like almost all of Apple’s bond sales. The management of the offering is done by JPMorgan Chase & Co., Barclays Plc and Goldman Sachs Group Inc.


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