Market Extra: Apple pulls in pricing, joins record corporate debt borrowing spree

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Apple Inc. makes borrowing during a pandemic look easy as pie.

The iPhone maker on Monday rolled out a four-part bond deal, adding its name to the roster of U.S. investment-grade companies borrowing a record amount of debt in the corporate bond market during the pandemic.

The Apple AAPL, +0.80% debt deal already has stirred up significant interest for its bonds, a series that is slated to mature in three, five, 10 and 30 years.

Bankers narrowed their target price level on $2 billion of 3-year bonds by roughly 35 basis points to 60 basis points over risk-free Treasurys, versus the initial 95 area circulated Monday morning, according to a person with direct knowledge of the dealings.

Its longer-dated bonds also were in high demand, with the target on the $2.5 billion parcel of 30-year bonds falling about 25 basis points to 145 basis points over Treasurys from an initial level of roughly 170 basis points.

“It’s a nice reminder that even in this uncertain market, that investment-grade companies have access to capital,” said Tom Murphy, head of investment-grade corporate credit team at Columbia Threadneedle Investments, in an interview with MarketWatch.

“So many companies would love to be in their situation from a capital perspective,” he said of Apple and its cheap access to debt and significant cash pile.

The Apple bonds come amid a record deluge of investment-grade supply over the past two months as companies have raced to stockpile cash during the coronavirus pandemic, which has forced stores to close, schools to shutter and the loss of millions of jobs in the U.S.

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So far this year, a cumulative of $807.1 billion of investment-grade corporate bonds have been issued, making it the fastest start to the year ever, according to B. of A. Global Research.

Apple, which had a massive $190 billion cash hoard as of its first-quarter earnings last week, indicated that the new debt will be used for a variety of general corporate purposes, including paying dividends, stock repurchases, debt repayment and working capital.

Read: Apple earnings dip amid coronavirus pandemic, but investors set to receive billions more

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Apple has $8 billion of debt coming due in 2020, mainly borrowed in the U.S. and Japanese debt markets, according to analysts at CreditSights.

“They may be setting themselves up to pay that back,” said Murphy.

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