Apple bonds offer very low risk opportunity
This week Money asks fixed income experts FIIG securities where to invest and their pick is Apple bonds.
Last month Apple issued the largest yet corporate bond issue in the Australian over-the-counter market of $2.25 billion.
This is more than double the previous $1 billion record, set by BHP in October 2012.
The issue comprised three tranches: one fixed- and one floating-rate bond with four-year terms and one seven-year fixed-rate bond.
Institutions were keen investors, recognising the very low-risk nature of the bonds (rated AA+ by Standard and Poor's) and the opportunity to diversify by including the global powerhouse in their portfolios.
Apple Inc. is a US multinational technology company headquartered in Cupertino, California.
It designs, manufactures and markets mobile communication and media devices, personal computers and portable digital music players, and sells a variety of related software, services, accessories, networking solutions and third-party digital content and applications.
Apple is the world's second-largest information technology company by revenue after Samsung Electronics, the world's largest technology company by total assets and the world's third-largest mobile phone maker.
On November 25, 2014, in addition to being the largest publicly traded corporation in the world by market capitalisation, Apple became the first US company to be valued at over $US700 billion ($1005 billion).
Three Apple bonds available to wholesale and sophisticated investors as follows:
- A fixed rate, four-year bond paying a yield to maturity of 2.53%.
- A floating rate four-year bond with an expected yield to maturity of 2.61%.
- A fixed-rate seven-year bond paying a yield to maturity of 3.49%.
- Minimum investment per bond is $10,000
- FIIG is a dealer and we take a small brokerage fee when we transact (this is already included in the yield-to-maturity returns shown above).
- A custody service fee is also charged