Apple is planning another large bond sale at a time when investors are paying near-record premiums for high-quality bonds.
The technology giant will sell a combination of bonds with maturities ranging from five years to 30 years, according to a filing with U.S. regulators. The company was originally trying to sell $5 billion in bonds, according to traders, but investor demand has been strong and Apple’s offering might go as high as $6.5 billion.
The sale is not one of the largest bond offerings from Apple.
Apple sold roughly $17 billion in bonds in 2013, which at the time was the largest bond sale ever by a U.S. company. A year later, Apple sold $12 billion in bonds.
The company has used the proceeds previously to pay investors dividends and increase its share buybacks.
Apple has plenty of cash already. It reported $178 billion in cash and marketable securities on hand at the end of December. But most of that is parked overseas and, like several other large tech companies, Apple has been reluctant to incur taxes that would apply if it used that money in the United States. As of Dec. 27, Apple said $157.8 billion of its cash and marketable securities are held by foreign subsidiaries and would be subject to this country’s higher corporate-tax rates if brought home.
With so much money on its balance sheet, Apple is considered an ultra-safe investment and has typically paid investors extremely low interest rates on its debt.
The company is also likely taking advantage of the recent drop in bond yields. The U.S. 10-year Treasury note, which is often used as a benchmark for other bonds, was trading at a yield of 1.67 percent Monday – its lowest level in two years.
Meanwhile, the company has taken steps to appease investors, including the outspoken Carl Icahn, who believe they should receive more of the company’s profits. Apple increased its quarterly dividend to 47 cents a share from 44 cents last year. As of the end of December, the company said it had bought back $73 billion worth of stock as part of a $90 billion repurchase program.
The company earned a stunning $18 billion in profit on record sales of $74.6 billion for the quarter that ended Dec. 27.