Apple to enter Australian bond market

The Australian bond market, which has long been considered not strong enough to attract big investors or large scale diversification, finally gets a high profile borrower to refute that long standing belief. The Australian debt market gets Apple Inc. history’s most profitable company to borrow from it.

Banking on the strong possibility of a debut bond issue by the company, Deutsch Bank, Commonwealth Bank and Goldman Sachs have scheduled investors' calls on Tuesday to keep the local bond managers updated on the “Apple Credit.” The deal, which will be targeting large institutions, is a big leap for the Australian bond market, which was until now was thought to be not fit for supporting diversification for investors and incapable of providing sustainable funding to Australian companies.

"It's terrific that global champions are recognising that they get funding diversification in the Australian bond market," Aberdeen Asset Management's head of Asia Pacific credit research John Manning said. "Apple should offer good diversification for local investors but I am sure there will be interest through the Asia Pacific region."

The Sydney Morning Herald reported that since Apple has been seeking to diversify its multi-billion dollar debt book, its treasury has been closely following the developments in the Australian bond market. Besides U.S. dollar, which is its main funding currency, Apple has been raising funds in yen, euros and Swiss francs while it planned to enter the debt market to return capital to its shareholders.

In recent times, a bond sale of AU$700 million by global brewer SABMiller might have encouraged Apple and given it hope that it can diversify its funds by issuing Australian bonds.

"Being one of the largest publicly traded companies in the world and a global leader in consumer electronics, it would offer local investors an opportunity to diversify their corporate bond exposures into one of the world’s leading technology companies, a sector which hasn't historically been a significant issuer into the Aussie market," said Vivek Prabhu, Perpetual Investment's deputy head of fixed income.

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