Apple has managed to raise approximately C$2.5 billion from the Canadian maple bond market in its first ever bond issuance in the North American country. This is also the biggest maple bond offering since 2007 after having suffered from a slump. Sources indicated that Apple had intended to raise C$1.5 billion but there was more interest in the bond than had been anticipated.
General corporate purposes
A U.S. Securities and Exchange filing indicated that Apple intends to use the money raised from the offering to fund acquisitions, share buybacks and paying dividends. Apple’s maple bond was sold to institutional clients through a private placement that was led by Goldman Sachs Group, BMO Nesbitt Burns, RBC Dominion Securities and HSBC Bank Canada. TD Securities, CIBC Capital Markets and Bank of America Merrill Lynch acted as co-managers. The unsecured senior notes are expected to mature in 2024.
Other countries where Apple has issued bonds in include Japan, Taiwan, Australia, Switzerland and the United Kingdom. This has been with a view of funding operations in those particular countries. Other foreign firms that have issued bonds in Canadian dollars include AT&T which issued C$750 million in May. Anheuser-Busch InBev SA also raised $2 billion in the same month. Approximately C$8.9 billion has so far been raised in Canadian dollars by foreign firms this year. In 2016 the amount that was raised was C$1.9 billion.
Canadian investors have shown a strong appetite for maple bonds and this is being attributed to lack of options. In the past three sectors have dominated the maple market and these are telecommunications, utilities and financials.
“So there is really a dearth of high-grade-quality corporate paper that’s been issued in Canada. … So we’ve really filled that gap with these type of maple issuers,” said HSBC Securities’ head of debt syndication and debt capital markets Brad Meiers.
It is also understood that Canadian investors are ready to accept a low yield from a firm like Apple since it has high ratings owing to its huge cash reserves and impressive performance. Currently Apple’s credit rating by Standard & Poor’s is AA+, which is just a notch lower than an AAA rating.