Apple (AAPL) Stock Takes Cues from Bond Market
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Price: $332.00 -1.83%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.4%
EPS Growth %: +20.4%
Overall Analyst Rating:
SELL (= Flat)
Dividend Yield: 0.4%
EPS Growth %: +20.4%
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In the case of Apple's (NASDAQ: AAPL) stock Tuesday, the bond market spoke and the equity market listened.
In a record U.S. bond sale, Apple sold $17 billion in various notes through investment banks Goldman Sachs and Deustche Bank. Apple is issuing $3 billion of floating-rate notes and $14 billion of fixed-rate notes in six parts with maturities ranging from three years to 30 years.
The $1 billion of 3-year floating rate notes will pay 5 basis points above 3-month LIBOR. Meanwhile the $1.5 billion of 3-year fixed rate notes will pay 20 basis points above similar-maturity Treasuries. The $5.5 billion of 10-year fixed rate notes are said to pay 75 basis points above 10-year Treasuries and the $3 billion of 30-year debt may pay 100 basis points above 3-year Treasuries.
Proceeds from the offering will be used to finance the company's increased dividend and share repurchase plan. On April 23rd, Apple increased their existing share repurchase program authorization from $10 billion to $60 billion and raised their third quarter 2013 cash dividend by 15% to $3.05/share.
Demand for the new Apple bonds was exuberant, to say the least. The order book was said to have reached $50 billion, bankers said.
In response to the fixed income enthusiasm for the bonds, the stock market read the tea leaves. If smart-money bond traders are clamoring for the cheap debt, then the 2.8 percent dividend yield on the common stock looks very attractive.
Shares of Apple closed up 2.9 percent Tuesday to $442.78
In a record U.S. bond sale, Apple sold $17 billion in various notes through investment banks Goldman Sachs and Deustche Bank. Apple is issuing $3 billion of floating-rate notes and $14 billion of fixed-rate notes in six parts with maturities ranging from three years to 30 years.
The $1 billion of 3-year floating rate notes will pay 5 basis points above 3-month LIBOR. Meanwhile the $1.5 billion of 3-year fixed rate notes will pay 20 basis points above similar-maturity Treasuries. The $5.5 billion of 10-year fixed rate notes are said to pay 75 basis points above 10-year Treasuries and the $3 billion of 30-year debt may pay 100 basis points above 3-year Treasuries.
Proceeds from the offering will be used to finance the company's increased dividend and share repurchase plan. On April 23rd, Apple increased their existing share repurchase program authorization from $10 billion to $60 billion and raised their third quarter 2013 cash dividend by 15% to $3.05/share.
Demand for the new Apple bonds was exuberant, to say the least. The order book was said to have reached $50 billion, bankers said.
In response to the fixed income enthusiasm for the bonds, the stock market read the tea leaves. If smart-money bond traders are clamoring for the cheap debt, then the 2.8 percent dividend yield on the common stock looks very attractive.
Shares of Apple closed up 2.9 percent Tuesday to $442.78
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