The tech giant trumped the previous largest-ever bond offering, by Swiss pharmaceuticals firm Roche in 200, raising $17bn (£10.9bn).
According to reports the debt sale was hugely oversubscribed with Goldman Sachs and Deutsche Bank recording demand for the notes up at $50bn.
Apple’s decision to raise cash through debt comes at a time when large cap, well-financed companies are able to access funding at an incredibly attractive cost.
Read how Apple’s announcement of the iPad mini affected the share price back in October.
‘Worrying’ for markets
“This is great for the bond issuer, but not for the bond holder,” said Arnaud Gandon, CIO at Heptagon Capital, “People are being silly. There is such a search for yield at the moment, which is directly related to quantitative easing and ultra-low interest rates in the US pushing investors up the yield curve.
“A three-year corporate paper issued at a yield of 0.45% does not represent good value in our opinion: investors are not fully compensated for the risks involved at such a low level of spreads.”
GLG’s Stragegic Bond Fund Manager, Jon Mawby, agreed: “Worryingly for market dynamics the issuance was met with strong demand despite being explicitly designed to return cash to shareholders, an action more normally associated with significant concessions in terms of bond market pricing.”
Since the start of the year Apple’s share price has fallen 19.3% from 549p to 442p, although it has recovered from a low of 390p hit in the second week of April.
Back in September last year a share price high of 705p was achieved and over the past six months it is down 25%.
Equity fund managers react
UK-based US equity fund managers have not been immune to the loss of confidence in Apple. Find out the US equity managers shedding assets despite the market rally.
Over the past 12-month, six-month and three-month periods the stock is the most sold of any in the North America unit trust sector.
Even over the past month it has remained the fourth most sold stock, with approximately half of the sales of the most-sold Schlumberger during the timeframe, according to FE Analytics.
This indicates investors have not yet started to see it as fair value, despite its recent share price declines and have not yet started buying into the slump.
Gandon said: “We have not owned Apple directly for at least two years. It was a very consensual holding, every portfolio manager had to own the stock. Overcrowding of such a magnitude never leads to a happy outcome.”
Baillie Gifford American Fund’s co-manager Gary Robinson, said last week his team had sold out of the stock a number of months ago for similar reasons, although he conceded the stock had done well for the team while it was a holding.
Contrarian view
A more contrarian view was given by Legg Mason’s Peter Vanderlee, manager of the US Equity Income Fund, who was encouraged by Apple’s commitment to rewarding shareholders.
“While you may not expect Apple to feature in a deep value or income fund like ours, we’ve actually owned it for over two years and believe it fits our investment approach very well.
“While we fully expect Apple’s tremendous growth to slow, and the results to reinforce this, we’re confident that as a business it can continue to grow at handsome rates.”
It is wise to note that as the largest US company in terms of market cap at £415bn even if people are just selling down their holdings it could lead to it being the most-sold stock.
However, not a single UK-domiciled Oeic or unit trust holds Apple in its top ten holdings, according to FE, a marked change from this time last year I would wager.
Elsewhere on the site: Why are protesters gathering outside JPMorgan’s Finsbury Square office?
