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Apple is selling $10 billion of notes in its first trip to the bond market in six months, becoming the second cash-rich technology company to sell debt this week despite prospects of a U.S. repatriation-tax holiday.
The iPhone maker may sell debt in as many as nine parts with up to six different maturities, according to a regulatory filing. The longest portion may be a 30-year bond. Apple (AAPL) will use proceeds for general corporate purposes, which can include share buybacks and capital spending. Microsoft sold $17 billion of bonds earlier in the week, capping the busiest month for U.S. investment-grade corporate issuance ever.
Apple has become a bond market regular in recent years, selling debt at least annually since 2013. Though its debt load has grown, its $246 billion cash pile means the company can maintain credit ratings that are just one step below the top grade.
[...] The $1 billion, 30-year bond may yield about 1.15 percentage points more than Treasuries with similar maturities, according to a person familiar with the matter, who asked not to be named because the deal is private. That's down from initial discussions of around 1.4 percentage points. Goldman Sachs (GS), Deutsche Bank (DB) and JPMorgan (JPM) are managing the sale.
Source: Investor's Business Daily
(Score: 2) by Kilo110 on Friday February 03 2017, @01:02PM
If Apple is sitting on 246 billion of cash. Why are they acquiring more By selling debt?
(Score: 2) by rondon on Friday February 03 2017, @01:49PM
Taxes. It wouldn't surprise me if they are finding a way to pay back this money they borrowed in the US with funds that have not been repatriated.
(Score: 0) by Anonymous Coward on Friday February 03 2017, @03:28PM
If that's the reason they should have waited. Cutting the corporate tax is top priority for President Trump.
With all that Congress has to work on, do they really have to make the weakening of the Independent Ethics Watchdog, as unfair as it may be, their number one act and priority. Focus on tax reform, healthcare and so many other things of far greater importance! #DTS
(Score: 2) by bob_super on Friday February 03 2017, @06:16PM
It doesn't matter how much Trump cuts the taxes. Some companies may bring back a little amount of cash to please the Dictator, but the rest will stay safely abroad.
Apple's money outside the US is taxed at an infinitesimal rate (sub-0.1%). Why would they bring it back to a place where their placements'returns are taxed, even as low as 10%? Would you?
(Score: 0) by Anonymous Coward on Friday February 03 2017, @07:22PM
I'll bring in my money and open factories in Michigan, Ohio and Wisconsin. You'll waive the tax and start a trade war with South Korea. Shake on it?
(Score: 5, Informative) by bzipitidoo on Friday February 03 2017, @02:35PM
> Apple (AAPL) will use proceeds for general corporate purposes, which can include share buybacks
That's why. It's a scummy way for corporations to transfer wealth from the corporate treasury to upper management's personal pockets. They get paid in stock options, or in stock. But if they convert those into money by selling, the old law of supply and demand kicks in and the share price of the company goes down. So they have the company borrow huge piles of money and do a share buyback to drive share prices up whenever they want to sell off theirs.
If they do too much buybacks with borrowed money, the company's debt becomes too burdensome. Good companies such as Hostess have folded thanks to that. Sometimes driving a company into bankruptcy is deliberate. Bankruptcy is a fantastic way to screw all the little people invested in a company. All the stocks and bonds the little people hold become worthless. That can catch a few big fish too, but the ones who are caught can take the blow, they have millions elsewhere. Low level employees all get screwed out of their pension plans when the bankruptcy takes those down. Union contracts get shredded. The new owners pick up the company for pennies on the dollar, with its debts all erased, rehire some former employees still available and willing at much lower rates of pay and benefits, and outsource the rest of the work. The whole messy affair gets nice, friendly coverage in the media, with the likes of the WSJ emphasizing how the restructuring shed all these obligations that "weakened" the company, no mention of social obligations or any silly notions of fairness, and any mention of how the company went bankrupt in the first place implicitly put down to circumstances beyond their control, no talk of the bosses' greed damaging the company's credit. Or maybe they blame it on employee and union greed. Never let a crisis go to waste, you know.
(Score: 0) by Anonymous Coward on Friday February 03 2017, @06:06PM
oh?! very good!
(Score: 0) by Anonymous Coward on Friday February 03 2017, @11:16PM
The other part is tax avoidance. As debt can be considered against profit and is tax deductible. If there is one thing apple is good at it is tax avoidance.
(Score: 3, Insightful) by Dunbal on Friday February 03 2017, @03:00PM
Because two piles of cash are better than one - especially when one of them is hidden out of reach of tax authorities and the other one gets to deduct interest from taxes.