Apple sells $14 billion of bonds to take advantage of low interest rates

As reported by Bloomberg, Apple has sold $14 billion of bonds. The company is reportedly taking advantage of cheaper borrowing costs in order to return more cash to its shareholders.

The company issued debt in six parts. The longest portion of the offering, a 40-year security, will yield 95 basis points above Treasuries, after initially discussing between 115 and 120 basis points, according to a person with knowledge of the matter, who asked not to be identified as the details are private.

The report notes that Apple had only made moves like this once a year until 2020, but the low interest rates of the past year made the practice more appealing to the company.

Until 2020, Apple hadn't borrowed in the U.S. investment-grade market more than once in a calendar year since 2017. But rock-bottom interest rates proved too tempting for the world's most valuable company to pass up as it pursues aggressive share buybacks and dividends.

Robert Schiffman, a senior credit analyst at Bloomberg, says that Apple's move indicates higher shareholder returns.

"Apple is returning to the bond market, even with $196 billion of cash on hand, which we believe suggests the pace of shareholder returns is likely to rise to new highs."

The person familiar with the matter says that the company plans to use the funds for a variety of "general corporate purposes."

The tech giant said it will use the proceeds for general corporate purposes, including buying back stock and paying dividends. It may also be used in funding for working capital, capital expenditures, acquisition and repayment of debt, the person said.

Apple just came off a record quarter, raking in $111.4 billion in the first quarter of 2021.