The new 30 Year Apple Bonds vs Treasuries

[number5858]

I don't have the prospectus yet, but according to the WSJ, the deal was expected to yield about 1 point more on the $3 billion in 30-year bonds more than comparable Treasurys bonds. I know the PP says to invest in 30 year treasuries, but wouldn't these Apple 30 year bonds be just as good if not better than the US Treasuries considering they are also AA rated, and Apple basically has no debt? What are everyone's thoughts? I would imagine they should be pretty liquid too based on what I am seeing in terms of strong demand.

[Ad Orientem]

I don't have the prospectus yet, but according to the WSJ, the deal was expected to yield about 1 point more on the $3 billion in 30-year bonds more than comparable Treasurys bonds. I know the PP says to invest in 30 year treasuries, but wouldn't these Apple 30 year bonds be just as good if not better than the US Treasuries considering they are also AA rated, and Apple basically has no debt? What are everyone's thoughts? I would imagine they should be pretty liquid too based on what I am seeing in terms of strong demand.

How do you know where Apple will be 5 years from now, much less 30? When Apple can print its own money I may be willing to revisit this topic.

[Pointedstick]

No, absolutely not. Apple doesn't have a printing press and nuclear weapons. Yet... 

[dualstow]

I'm going to buy some if the rate is ok. These will look nice next to my Google bonds.
"Why not just buy 10-year treasuries?"
Well, I do.

[MachineGhost]

After what I just wrote in the corporate bond thread, all I have to say is this:

[dualstow]

After what I just wrote in the corporate bond thread, all I have to say is this:

Point taken, but it's just a nibble compared to my Apple stock holdings, so I don't think that makes me a "patsy". If I like the yield and buy a small amount of the bonds, I know what I'm getting, just like I did with Google. Just for fun.

[MediumTex]

Are they callable?

If they are, they wouldn't be very useful, IMHO.

[number5858]

I am trying to get the prospectus to find out.

[number5858]

I only checked the 2043 bonds, but they are not callable. In this case, I have to say that I almost have more faith in Apple than the US Treasury. At least we know Apple is run by professionals rather than political appointees.

[dualstow]

You can see a list of the bonds and their CUSIPs here:
http://www.learnbonds.com/apples-blockb ... overrated/

I plugged in the cusip for the Notes maturing 05/03/2018 at Fidelity (where you don't need to sign in to check) and I see there is no call protection for these. They are "continuously callable." Actually, if you're only interested in callable/not callable you can learn that at the link above.

[dualstow]

Still, the article seems to contradict what I found at Fidelity. It says

The floating-rate notes are non-callable,

but that's not what Fidelity shows for the notes that the article describes as:

May 3, 2018 maturing floating-rate notes, CUSIP 037833AG5, paying interest at a rate equal to three-month LIBOR plus 0.25%

As I wrote above, Fido says they are callable. Hmm.

[number5858]

OK, I finally got the prospectus. You are correct, the 2043 are callable: "The fixed
rate notes may be redeemed at our option, at any time in whole or from time to time in
part...."

[MediumTex]

Isn't Apple stock paying a higher yield than these bonds?

Why not just buy the stock if you want a stream of payments with WAY more upside than these bonds?

[dualstow]

Isn't Apple stock paying a higher yield than these bonds?

Why not just buy the stock if you want a stream of payments with WAY more upside than these bonds?

I can't answer for others, but I've been in and out of the stock since it was a mere double-digit apple seed.
With the recent dividend hike in late April and that Dick Tracy watch on the horizon, I don't mind holding on. (Most of my most recent purchases are already long).
Speaking for myself, I would not put a significant portion of my vp into any single corp bond.

But for me, it would never be a choice between the stock and the bond of a particular company. I can see plenty of people who have faith in Apple and perhaps a distaste for treasuries -- ideologically based, not mathematically based --  who already own an equity index, and who want to own some bonds that they can hold onto until maturity, something that won't, say, swing from 700 to 400.

As for holding until maturity, though, that lack of call protection, as you pointed out, makes these bonds a far less appetizing choice.

[clacy]

No, absolutely not. Apple doesn't have a printing press and nuclear weapons. Yet... 

This was exactly what I thought when I read the OP

[AdamA]

Isn't Apple stock paying a higher yield than these bonds?

Why not just buy the stock if you want a stream of payments with WAY more upside than these bonds?

I don't think these bonds have call protection either.

You can buy a 25 year Coca Cola bond with call protection that yields around 4%. 

[dualstow]

I don't think these bonds have call protection either.

Now wherever did you get that idea? Certainly not from the first 97% of this thread.
Just teasing. 

[AdamA]

I don't think these bonds have call protection either.

Now wherever did you get that idea? Certainly not from the first 97% of this thread.
Just teasing. 

I know...sorry for that.  I read the earlier part of the thread and then looked up the Apple bonds vs. the Coca Cola bonds.  What I was getting at was, don't you guys think the Coca Cola bonds are better?  Higher yield and call protection, and I kind of think that, although Apple is hot right now, Coca Cola is more likely to be around in 25 years...

...not that I plan to purchase either of these.

Just fun to discuss.

[Ad Orientem]

...I read the earlier part of the thread and then looked up the Apple bonds vs. the Coca Cola bonds.  What I was getting at was, don't you guys think the Coca Cola bonds are better?  Higher yield and call protection, and I kind of think that, although Apple is hot right now, Coca Cola is more likely to be around in 25 years...

...not that I plan to purchase either of these.

Just fun to discuss.

+1
Coca Cola has staying power. If I thought there was such a thing as "blue chip" stocks (I don't) I would say Coke was the real thing. Tech is so very fast moving that you just don't know whats going to be around five years from now, much less twenty or more. But a world without Coca Cola? Maybe when the sun rises in the west and sets in the east.

[dualstow]

I haven't looked at Coke bonds but I agree they seem quite safe. I still have KO stock from the mid-90s when I was not in charge of my own investments. Will probably never sell.

If I thought there was such a thing as "blue chip" stocks (I don't) I would say Coke was the real thing.

heh heh

[portart]

One fact never changes. You get paid to accept risk. There is a reason Apple stock will pay one percent more then gov bonds, there are backed by the company and not the US government. There is risk in both. You have to decide where you feel safest.

[MachineGhost]

One fact never changes. You get paid to accept risk. There is a reason Apple stock will pay one percent more then gov bonds, there are backed by the company and not the US government. There is risk in both. You have to decide where you feel safest.

Its not whether an investment is risky or not (they all are), its whether you're getting paid commensurate with the risk you are taking up.  Sometimes the market is exhuberant and there is no reward that can justify the risk.

[dualstow]

Revisiting this thread today because of the new Apple bond offering. Never did buy the bonds, still have the stock...