Travis Perkins and Polymetal to lose out in FTSE 100 reshuffle

Builders’ merchant Travis Perkins and mining company Polymetal face relegation from the FTSE 100 after their recent performances were hit by political events. The share price of Travis Perkins has dropped 29 per cent since the UK voted to leave the EU in June, as economic uncertainty has sparked concerns among some investors about the […]

Continue Reading


Eurozone inflation climbs to highest since April 2014

A welcome dose of good news before next week’s big European Central Bank meeting. Year on year inflation in the eurozone has climbed to its best rate since April 2014 this month, accelerating to 0.6 per cent from 0.5 per cent on the back of the rising cost of services and the fading effect of […]

Continue Reading


Wealth manager Brewin Dolphin hit by restructuring costs

Profits at wealth manager Brewin Dolphin were hit by restructuring costs as the company continued to shift its focus towards portfolio management. The FTSE 250 company reported pre-tax profits of £50.1m in the year to September 30, down 17.9 per cent from £61m the previous year. Finance director Andrew Westenberger said its 2015 figure was […]

Continue Reading

Capital Markets, Financial

BGC Partners eyes new platform to trade US Treasuries

BGC Partners plans to launch a new platform to trade US Treasuries early next year, in a bid to return to a market in the middle of evolution, according to people familiar with the plans.  The company, spun out of Howard Lutnick’s Cantor Fitzgerald in 2004, sold eSpeed, the second-largest interdealer platform for trading Treasuries, […]

Continue Reading


RBS share drop accelerates on stress test flop

Stressed. Shares in Royal Bank of Scotland have accelerated their losses this morning, falling over 4.5 per cent after the state-backed lender came in bottom of the heap in the Bank of England’s latest stress tests. RBS failed the toughest ever stress tests carried out by the BoE, with results this morning showing the lender’s […]

Continue Reading

Categorized | Capital Markets, Financial

Crowds line up for a bite of Apple’s big bond

Posted on April 30, 2013

They may not be labelled iBonds, but investors have again fallen for the famed “buzz” of an Apple product launch.

Like the hordes of consumers who line up for hours at Apple stores seeking a new iPhone or iPad, so US and global money managers are flocking for a slice of the company’s mammoth $17bn bond offering.

    The amount of orders for the debt sale reached $52bn, and Apple entered the record books with the largest corporate bond sale in history, with a $14bn offering of fixed rate and $3bn of floating rate debt. Final pricing for the six-part deal, offering maturities from three to 30 years came late on Tuesday, with the some of the tranches coming in at tighter levels than initially anticipated.

    The iPhone maker’s blockbuster US debt sale is perfectly timed to take advantage of ultra low interest rates and strong demand from investors eager to own top quality credit in a world where defensive strategies are highly popular.

    As a new arrival in the world of US investment grade credit, Apple is generating plenty of favourable attention among money managers. With its high double-A rating, Apple will sell its bonds at low yields, but for investors what matters is that a marquee name has entered their universe.

    “Apple is a high-quality debt issuer and it’s a significant deal in terms of size,” says Jay Mueller, portfolio manager at Wells Capital. “When investors see a new name in the corporate bond market with the status of Apple, they jump on it. Portfolio managers can often have high exposure to other quality names, so a new name helps diversify their investments.”

    “This sale is guaranteed to get a lot of attention and may even bring new people to the bond market,” says Lon Erickson, managing director at Thornburg Investment Management.

    Investors are also looking beyond a usually troubling motivation on the part of Apple to sell debt, namely funding shareholder friendly activities that over time can weaken a balance sheet.

    “Certainly in the case of Apple, and other companies, debt issuance is being used to return cash to shareholders, beyond funding operations,” says Mr Mueller. “Bond investors always worry about shareholder friendly activities, but Apple has lots of cash flow, a strong balance sheet and high margins.”

    Apple is selling debt for the first time since the 1990s to finance a $100bn return of cash to shareholders over the next three years. This comes after pressure from investors, who have watched the company’s stock price drop 40 per cent from its $702.10 high last September to below $400 earlier this month. The stock climbed 2.9 per cent to $442.78 on Tuesday.

    Apple stands apart in many ways, notably with its cash pile of $145bn. Issuing debt when a company sits on such a massive amount of money may appear odd, but two-thirds of Apple’s stash sits overseas. Bringing that money home to fund buybacks and dividend payments stands to incur a US tax charge of up to 35 per cent. Issuing bonds helps Apple avoid a large tax bill, and take advantage of tax-deductible interest payments.

    “What Apple is doing is saving cash instead of getting hit by heavy taxes if they decide to repatriate the money,” says Paul Hickey, co-founder of the Bespoke Investment Group.

    It’s a theme that resonates across other large US multinational companies, particularly in the technology sector where Oracle, Microsoft and Google are debt issuers.

    “For managers who already own Microsoft, for example, this gives them a very good opportunity to add exposure to the tech sector via another credit,” says Mr Erickson.

    Mr Hickey says: “Apple is not setting up a trend here. If anything, Apple is arriving to this party late rather than early.”

    It may be tardy, but Apple is capping a huge month for investment grade issuance in the US, with April’s sales north of $100bn, the largest since 2008. For many companies, the combination of cheap borrowing costs and solid appetite for debt from investors is too hard to ignore, with the proceeds going towards buybacks and boosting dividends.

    “Corporations are really coming out of the woodwork after earnings season to sell debt and buy back stock,” says Michael Kastner, principal at Halyard Asset Management.