Fixed Income  

GLG’s fixed income manager Mawby avoids Apple bonds

GLG’s Jon Mawby has avoided buying into the $17bn (£10.9bn) debt issuance from tech giant Apple.

Mr Mawby, who runs the group’s £114.6m Global Corporate Bond fund and co-manages the £121m Strategic Bond fund with Steve Roth, said the rationale for the issuance “once again demonstrates a bond market in overdrive as investors continue to reach for yield”.

The manager said the debt was issued in six tranches and the three-year bond only just yielded more than 0.5 per cent.

Reports suggest demand for the debt sale reached $52bn as the tech company entered the bond market for the first time since 1996.

“More worryingly for market dynamics the issuance was met with strong demand in spite of being explicitly designed to return cash to shareholders - an action more normally associated with significant concessions in terms of bond market pricing,” Mr Mawby said.

“The issue once again underlines the consequences of central bank liquidity intervention across global developed markets with investors bid for yield yet to be satisfied.”

The manager said there was a “continuing trend” for companies to try and improve earnings per share by issuing debt and buying back equity.

“Apple’s offering is no exception to this and is yet another reason companies continue to beat expectations on the bottom line yet miss top line growth predictions,” he added.