Apple is gearing up to issue another bond offering this week, with a conference call with investors reportedly scheduled today, according to reports this morning from Bloomberg and The Wall Street Journal. Apple hasn’t announced that it is holding an investor call today as of yet, but the announcement will likely be posted to Apple’s Investor Relations website if it is indeed happening. According to the WSJ, this bond offering will be the first from Apple to involve the euro currency:
Deutsche Bank and Goldman Sachs Inc. are arranging a call for the firm with investors Monday, and a deal, possibly at least partly in euros, could come as soon as this week, according to a person familiar with the matter. The iPhone maker has never issued debt in currencies other than the dollar before.
This week’s bond offering will be the second major one from Apple this year, and just the third significant one in recent company history. Apple sold $12 billion in debt in April (in an offering that was over three times over subscribed), and sold another $17 billion in 2013. Banks Goldman Sachs and Deutsche are again handling the Apple offering. Apple utilizes bond offerings as part of its extensive plan to return money to shareholders. Bonds allow investors to put a stake in Apple via a debt offering, which is an alternative to buying standard equity via the stock market.
FTC: We use income earning auto affiliate links. More.
What is a bond and how does it differ to stock? Does it go up and down in relation to the stock market or is it independent?
While a stock makes you a part-owner of a company, a bond represents a loan. The owner of a bond only receives interest payments and the principal at maturity (most bonds have a limited duration).
To put it in more simple terms: If you own a business, a stockholder would be like your business partner, while the bondholder is like the banker who gave you a business loan.
Given bond upside is limited (you can’t receive more than principal and interest, with stock you benefit from company value growth) bond prices usually only move in a far more limited range. More significant moves can occur if the financial situation of the issuer unexpectedly improves or deteriorates, or if the general interest rate environment changes
Thanks, great info. Does that mean a bond can never me worth less than the purchase price then unlike stock which can obviously devalue?