Despite the increase in corporate issuance, there has also been a notable absence: Big Tech.
Apple was last in the market on May 8th, when the Company completed a $5.25bn offering of 3-, 5-, 7-, 10- and 30-year notes. As a comparison, Apple’s issuance in May included a 10-year with a coupon of 4.3%, which in today’s market is trading approximately 20bps higher in yield.
Apple is known for its market timing; the 10- and 30-year Treasuries at the time were 3.51% and 3.82%, respectively. Rates have come off their highs, yet Treasuries are still almost +75 basis points higher than when Apple priced its last offering. The Company has $10.9bn maturing in 2024 and $34.5bn maturing in 2024-2026. The Company’s most recently reported cash balance of $162bn will allow Apple to continue its opportunistic and disciplined approach to debt issuance.
Amazon has the second-largest debt maturities in 2024 and 2024-2026. The Company has not issued in the debt markets since 11/29/22. The 2022 transaction, $8.25bn in total, was comprised of 2-, 3-, 5-, 7- and 10-year senior notes. As a comparison, the yield on the 10-year Treasury note at the time of that offering was 3.75%.
While 2024 maturities are relatively light for the other large-cap tech names, 2024-2026 represents a $73bn coming due for this group of issuers.
Broadcom’s acquisition of VMWare has now closed, and many expect the Company to launch a sizable bond offering before year-end. The Company secured a $28bn term loan in August to refinance the $32bn bridge put into place at the time of the acquisition. Broadcom was also upgraded to BBB by S&P after the closing, while Moody’s revised its outlook to positive.
Tech issuers are often afforded the luxury of employing an opportunistic approach to debt issuance due to significant cash balances. The market will watch with interest as to when and which Tech company will make the next move should Treasuries continue to rally. Broadcom will also have to decide soon whether to refinance part or all of their $28bn in-term loans in the bond market before year-end.