Reuters: Most Read Articles: UPDATE 4-Apple wows market with dollar bond deal

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UPDATE 4-Apple wows market with dollar bond deal Apr 30th 2013, 15:43 Tue Apr 30, 2013 11:43am EDT (UPDATES with order books over $50 billion) By John Balassi NEW YORK, April 30 (IFR) - Apple Inc came to market Tuesday with what could turn out to be the largest non-bank bond sale in history, as the U.S. computer giant seeks funding to return capital to restless shareholders. The only major tech company without a penny of debt on its books, Apple announced a six-part all-dollar bond offering - its first ever - to help pay for the $100 billion capital return program. The company is offering three-year and five-year fixed and floating-rate notes, as well as 10-year and 30-year fixed-rate notes via Deutsche Bank and Goldman Sachs. By just before midday in New York, the deal had attracted a whopping $50 billion-plus in orders, two sources told IFR, reflecting the hunger to snap up debt from one of the most recognized brands in the world. Another source said investors were informed on Monday that this would be Apple's only bond deal of the year, apparently scuttling hopes of possible euro or sterling issues. That means Tuesday's issue could well be the biggest single bond sale in history, topping AbbVie's record $14.7 billion deal in November. "News that Apple is unlikely to come to the market again this year will likely enhance the appeal of today's bond," said a source close to the transaction. "The deal has got great momentum, and the (order) books are building very, very well." In another sign of the massive interest, investors were so hungry for the company's debt that they reportedly launched a reverse inquiry, coming to Apple to demand at least $5 billion to $6 billion in bonds. Sources said the company in fact plans to issue around at least $15 billion. Apple shareholders have been increasingly putting pressure on the makers of the iconic iPad and iPhone to put some of the cash back in their pockets. Sitting on roughly $145 billion in cash, Apple last week gave in to shareholder complaints and announced the capital return program. But with only $45 billion in readily available cash in the United States, the company likely will need to raise around $60 billion in the next three years to fund the plan. Pricing on the deal from Apple, which garnered an initial rating of Aa1/AA+ last week when it first announced plans to issue debt, is expected later on Tuesday. Initial price guidance across the tranches of the deal are Treasuries + 35 basis points (bp) area on the three-year fixed; Libor + 20bp area on the three-year floater; T+55 area on the five-year fixed; L+40 area on the five-year FRN; T+90-95 area on the 10-year; and T+115-120 area on the 30-year. But with the immense interest already out there, the final pricing of the deal is expected to ratchet in sharply. "We have seen crazy stuff happening in this market, and I would not be surprised to see it here," said Mirko Mikelic, senior portfolio manager at Fifth Third Asset Management. "I think you will see it blow right through the initial price thoughts, and the five- and 10-year could end up being 20bp tighter than initial price thoughts." (Reporting by John Balassi and Josie Cox; Writing by Marc Carnegie; Editing by Ciara Linnane) Link this Share this Digg this Email Reprints

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