Bond spreads for 'Magnificent Seven' tighten as investors celebrate interest-rate cut

By Ciara Linnane

'As frequent bond issuers, big tech loves lower rates,' says one market source

Bonds issued by the so-called Magnificent Seven group of big tech companies perked up Thursday, after the Federal Reserve delivered a 50 basis-point interest-rate cut that will lower their interest costs.

"As frequent bond issuers, big tech loves lower rates," said one market source.

Spreads on the group's outstanding bonds tightened on Thursday, continuing the trend of the past two weeks, as the following chart from data solutions provider BondCliQ Media Services shows.

One caveat: Only six members of the group have outstanding bonds. Tesla Inc. (TSLA) has issued convertible debt in the past, but those bonds have since been converted to equity.

Of the remaining six-Apple Inc., (AAPL) Amazon.com Inc. (AMZN), Alphabet Inc. (GOOGL), Meta Platforms Inc. (META), Microsoft Corp. (MSFT) and Nvidia Corp (NVDA) - Apple has the most outstanding bonds after issuing regularly in the 2010s to fund its shareholder rewards program.

There was net buying of the bonds on Thursday, led by Meta, which trades the widest to Treasurys.

Apple, Amazon, Alphabet and Microsoft have debt maturing within a year, while the whole group has debt coming due in one to three years.

The group's stocks were also higher across the board Thursday.

-Ciara Linnane

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

09-19-24 1227ET

Copyright (c) 2024 Dow Jones & Company, Inc.