By Wes Goodman
(Bloomberg) — Apple Inc.’s mega bond sale is fuelling speculation U.S. interest rates are poised to increase.
The iPhone maker sold $6.5 billion of debt as it locked in borrowing costs for as long as 30 years. Yields may not stay this low if forecasts for the Federal Reserve to raise rates this year are correct.
“This is the right time to issue corporate bonds,” said Kim Youngsung, the head of overseas investment in Seoul at South Korea’s Government Employees Pension Service, which manages the equivalent of $13.7 billion. “Interest rates will go up in the middle of this year.”
The benchmark U.S. 10-year yield was little changed at 1.67 percent as of 11:47 a.m. in Tokyo, according to Bloomberg Bond Trader data. It slid to 1.64 percent last week, approaching the all-time low of 1.38 percent set in 2012. The price of the 2.25 percent note due in November 2024 was 105 5/32.
Thirty-year yields were at 2.25 percent after dropping to a record 2.22 percent on Jan. 30.
Apple, based in Cupertino, California, sold its securities in five parts, with the longest portion maturing in 30 years, data compiled by Bloomberg show. The company issued $17 billion of debt in April 2013 in the biggest corporate-bond offering ever at the time.
Futures contacts indicate there’s a 63 percent chance the Fed will boost its benchmark to at least 0.5 percent by December, according to data compiled by Bloomberg.
