Apple, Shell lead new corporate bond surge

By John Balassi and Mike Gambale

NEW YORK, May 6 (IFR) - Apple (NasdaqGS: AAPL - news) and Shell (LSE: RDSB.L - news) led a full-scale charge Wednesday into the US corporate bond markets, which were awaiting a slew of new deals as companies seize on red-hot conditions to raise more capital.

With rates still low and investors clamoring to put their cash piles to work, borrowers steamed into both the high-grade and high-yield markets offering loads of new debt for sale.

"Most corporate treasurers are opting to go now," one debt syndicate banker told IFR. "Everyone knows borrowing costs will be going up later this year."

Apple, the world's largest company by market cap, announced a new seven-part bond intended to help fund dividends and share buybacks as part of its US$200bn capital return program.

The deal comes just three months after the Aa1/AA+ rated tech giant's last foray into the bond market, raising more money to give back to activist investors agitating for better returns.

Anglo-Dutch oil major Shell, rated Aa1/AA, also announced a new bond offering, a six-part trade and its first appearance in the debt capital markets since 2013.

Meanwhile in high-yield, Hospital Corporation of America was also out with a new US$1.6bn add-on bond, bigger than the original US$1bn deal that priced less than four months ago.

Burger chain Wendy's is out with a US$2.425bn deal, and a clutch of other trades was expected in both the high-grade and junk-rated sectors. The issuers moved quickly after reporting earnings.

Both asset classes have been thriving, not least because the Federal Reserve keeps holding rates down - meaning the time to borrow is sooner rather than later.

Wednesday's deals come just a day after pharmaceutical company AbbVie (Xetra: 4AB.DE - news) elicited a whopping US$60bn in demand for its US$16.7bn high-grade bond offering.

Investors keep pouring money into both the investment-grade and junk bond markets, which is also helping borrowers ratchet in their funding costs.

High-grade corporate bond funds had seen a net inflow of nearly US$28bn in new money this year as of the last week in April, according to data from Lipper US Fund Flows.

High-yield bond funds saw a net increase of more than US$10bn in cash over the same period. (Reporting by John Balassi, Mike Gambale and Anthony Rodriguez; Writing by Marc Carnegie; Editing by Natalie Harrison)