Apple was poised to sell its first-ever Green bond on Tuesday, bringing some clout to the growing market dedicated to environmentally friendly projects.
Brought as part of a $12 billion nine-part bond sale, the seven-year Green bond is raising $1.5 billion for the tech giant at a final spread of US Treasuries plus 135bp.
Apple’s bond sale is comprised of fixed and floating rate notes with maturities ranging from two to 30 years. According to two investors, the tech giant amassed a $30 billion order book for the jumbo deal.
“You have got to come up with a decent concession to do these big deals, coming back into a market where there hasn’t been a lot of issuance,” one investor told IFR.
The deal was the company’s first foray into the dollar bond market since May 2015. Apple’s deal ups the total amount of Green bonds issued in the high-grade market since March 2014 to around $10 billion, according to IFR data.
Over that period, just 13 high-grade names have tapped this market, and many have either been banks like Morgan Stanley, and Bank of America, or quasi sovereigns like Korea Export Import Bank and Mexico’s Nafina.
While that is a relatively small number, Apple’s name recognition should help bolster the market in US high-grade green bonds.
Apple’s issue marks a rare foray from a corporate name and is essentially the first big-name technology company to raise funding in this sector.
“They wanted to make a statement here that they want to be a bigger player in this space,” an investor said.
For now, few think that Green bonds bring much — if any — pricing advantage given the relatively small size of the market.
But printing this tranche as part of a larger issue made sense, and may have been part of a strategy to generate interest in a security traditionally less popular with investors, said a syndicate banker away from the deal.
Yet while markets still question what exactly constitutes Green funding, investors have been expressing more interest in the securities.
“Some of our clients are beginning to ask questions about Green bonds and whether you can populate a full portfolio with them,” a portfolio manager said.
Apple said it intends to use proceeds to meet its goal of only using renewable energy to power its corporate offices, retail stores and data centers.
It will use the funds to construct green buildings such as the company’s new planned campus in Cupertino.
“(Apple) aims to construct a facility (in Cupertino) that is highly energy efficient and entirely powered by renewable energy,” a company report said.