Investors Hit Hard As Apple Bonds Tank

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Ouch! How bad would this suck? I hope these guys are in it for the long haul. :eek:

Investors in Apple's record U.S. $17 billion bond deal have suffered some of the biggest losses in recent investment-grade new issues, with about $760 million wiped off the value of longer-maturing Apple securities that they bought just weeks ago. The prices of the Apple $5.5 billion 2.4 percent 10-year and the $3 billion 3.85 percent 30-year bonds have plunged so much since the deal priced on April 30 that it would take about three years of earned interest from the coupons for investors to cover their losses.
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Investor class has really become a "small leeches periodically sucked up by bigger leeches.
 
Wow... this is the first time I've seen an article about a company's bond prices changing. This is so much less of a story than stock price stories. People who bought the bonds with a low interest had to know they were going to hang onto them for a while; interest rates don't have much room to get lower. Also, the whole (US) bond market moved higher interest rate/lower price today; it's not really surprising Apple's bonds did too.

In summary, good job Apple for selling bonds with low interest rates, nice timing!
 
toast0 said:
Wow... this is the first time I've seen an article about a company's bond prices changing. This is so much less of a story than stock price stories. People who bought the bonds with a low interest had to know they were going to hang onto them for a while; interest rates don't have much room to get lower. Also, the whole (US) bond market moved higher interest rate/lower price today; it's not really surprising Apple's bonds did too
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I was thinking the same thing, but never let reality get in the way of a fanboy circlejerk
 
toast0 said:
Wow... this is the first time I've seen an article about a company's bond prices changing.
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Trade value changed, i still wonder why. Bond is pretty much a loan from investor to the company, so unless someone expects Apple to go bankrupt in next 10 years i don't see why would the trade value of 10 year bond drop. But hey, it's finances, there is no place for logic ! Just look at something like day counting convention, the people who issue bonds managed to create many variants of such simple thing as "how many days are there in month and year for bond price calculation" :
http://en.wikipedia.org/wiki/Day_count_convention
And this is one of the less confusing things in finance sector.
 
faugusztin said:
Trade value changed, i still wonder why. Bond is pretty much a loan from investor to the company, so unless someone expects Apple to go bankrupt in next 10 years i don't see why would the trade value of 10 year bond drop.
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Treasury bill prices dropped (interest rates went up) because Ben Bernanke said he was optimistic about the economy. As a result, almost all other bond issues are going to see a price drop as well, since the bond market is about relative risk: if US government 10-year bonds were going for for 2% and apple the same term for 3% yesterday; when the US goverment gets 2.25% today, chances are apple will get 3.25%. You could write the same article about almost any other recent bond issue; but Apple is better linkbait. Also, prices will probably go back up (interest rates back down) for all bonds a bit over the next week as people start to realize a big reaction to no news is probably overreaction.
 
toast0 said:
Treasury bill prices dropped (interest rates went up) because Ben Bernanke said he was optimistic about the economy. As a result, almost all other bond issues are going to see a price drop as well, since the bond market is about relative risk: if US government 10-year bonds were going for for 2% and apple the same term for 3% yesterday; when the US goverment gets 2.25% today, chances are apple will get 3.25%. You could write the same article about almost any other recent bond issue; but Apple is better linkbait. Also, prices will probably go back up (interest rates back down) for all bonds a bit over the next week as people start to realize a big reaction to no news is probably overreaction.
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Yep. The financial markets aren't so much about finance, but about the people buying and selling. Apple had nothing and HAS nothing to do with this story. It's just link bait as previously posted.
 
toast0 said:
Treasury bill prices dropped (interest rates went up) because Ben Bernanke said he was optimistic about the economy. As a result, almost all other bond issues are going to see a price drop as well, since the bond market is about relative risk: if US government 10-year bonds were going for for 2% and apple the same term for 3% yesterday; when the US goverment gets 2.25% today, chances are apple will get 3.25%. You could write the same article about almost any other recent bond issue; but Apple is better linkbait. Also, prices will probably go back up (interest rates back down) for all bonds a bit over the next week as people start to realize a big reaction to no news is probably overreaction.
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I don't think you know what you are talking about. Bond prices and yields have an inverse relationship. Yield up, price down.

Ben Bernanke has been "optimistic" about the US economy since 2006 when he said we would never have a recession or a housing crash. He is clueless.

Interest rates are rising because Bernanke suggested he *may* decrease the pace at which he is printing money and monetizing the US debt. Bond holders realize they may have no one to front run and sell their bonds to if he slow/stops printing.

Basically, the Bernanke's one-way Madoff-style Ponzi scheme is getting called into question.
 
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