Apple Bonds Yield More than Spanish Debt

MORNINGSTAR INVESTMENT CONFERENCE: Risk is no longer being rewarded, so how can bond investors find stable, inflation beating returns without default risks?

Emma Wall 13 May, 2014 | 12:01PM
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Bond investing has become a topsy turvy universe – where default risk is no longer rewarded, and safe havens such as gilts are eroded by inflation.

Speaking at the Morningstar Investment Conference, Invesco Perpetual co-head of fixed income Paul Read said that it was an example at how warped by external factors the bond market had become that Apple (AAPL) – a cash rich, low-risk company was yielding more than Spanish government bonds.

“When Apple issued a bond in Spring last year, it was the biggest bond issue of all time and yielded 2.4%, it is now 3.5%. In the same period Spanish government bonds have gone from paying 4% at to and now yielding less than Apple,” he said. “So you are being rewarded more buying corporate debt of a cash rich company than a debt ridden country. To compare - 50% of US youths have Apple products or aspire to having Apple products. Fifty per cent of Spanish youth aspire to having a job.”

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Apple Inc156.81 USD0.00Rating

About Author

Emma Wall  is former Senior International Editor for Morningstar