“Korean bankers are fretting that Apple may shun the country’s bond market after a local newspaper revealed that the secretive US phone maker had recently attempted to invest some of its vast cash pile in a local bank deal,” Frances Yoon reports for Reuters. “The Maeil Business Newspaper reported on October 12 that Apple had placed an order to buy US dollar bonds of KEB Hana , one of South Korea’s largest banks in asset terms, but that the issuer had chosen not to accept the bid.”
“The article infuriated Korean bankers, who said Apple was ‘extremely sensitive’ about revealing how it managed its cash,” Yoon reports. “‘This is not a small issue. Apple could stop buying Korean paper entirely,’ said a Korean banker, who did not participate in the KEB Hana deal. ‘This is super crazy.'”
“The Maeil later revised its article, eliminating Apple’s identity,” Yoon reports. “Concerns over Apple’s reaction stem from a similar case in 2014, when a Hyundai Capital Services executive told reporters that Apple had participated in its recent $500 million issue of three-year floating-rate notes. That, bankers said, upset Apple so much it refused to take part in any future bond issues from the company.”
“‘Apple never bought Hyundai Capital’s bonds again. Hyundai even went to Reno several times, but Apple would never meet them,’ said a banker close to Hyundai. Apple, with its corporate headquarters in Cupertino, California, manages much of its cash and treasury operations through a subsidiary, Braeburn Capital, in Reno, Nevada,” Yoon reports. “Apple’s total cash, cash equivalents and marketable securities reached a record $238 billion as of September 24, according to a 10-K filing, making it the world’s biggest corporate investor.”
Read more in the full article here.
MacDailyNews Take: In a perfect world, Apple should have been freezing out South Korea completely until the country gets a handle on their thieving chaebol and stops the rampant patent and trade dress infringement. Oh wait, that’s impossible for South Korea, since the country is basically owned by Samsung.
Make ’em pay, Luca and Tim, make ’em pay!
SEE ALSO:
Korea Fair Trade Commission clears Samsung’s use of standard-essential patents against Apple – February 27, 2014
Convicted patent infringer Samsung allegedly pressures Korean newspaper to kill coverage of anti-Samsung film – February 21, 2014
South Korea, the Republic of Samsung – December 10, 2012
Welcome to South Korea, the ‘Republic of Forgery’ – September 11, 2012
I’m not particularly surprised that a local newspaper published this story, but there are two aspects that puzzle me.
One is why Apple’s proposal to invest was declined by KEB Hana, while investments from other US tech companies were accepted? The other aspect is why this whole matter was not kept confidential? How did the Maeil Business Newspaper get the details?
If Korean bankers are concerned that the world’s largest corporate investor might have no further dealings with Korean investments, then they need to look closer to home to find an answer.
Apple gave Samsung a chance and Samsung blew it. Apple gave the Korean bond market a chance and they blew it. There could be something of a trend developing here. Apple is not a company that has a track record for overlooking untrustworthy behaviour.
This is a total non-story. Corporate bond issues are often “oversubscribed”. When Apple sells its own bonds, haven’t we seen stories of demand being triple what was being sold? So, obviously, some buyers don’t get to buy. No big deal. If other companies got to buy, sometimes it has to do with prior purchase history. Clearly this was Apple’s first time to bid for KEB Hana bonds.
Apple might also have asked to buy more than was available. This was only a $350M sale. $100M was available for foreign purchase. Apple has Trillions they need to invest. Given Apple’s cash pile, $100M might be the minimum they would consider to buy, and since it would be unlikely for the seller to give the whole debt issue to one buyer, they sold them to someone else.
Confidential? There’s no need for this kind of info to be confidential. A company is selling bonds at a set price. A buyer is offering to buy, at that price, there’s no need for confidentiality.
Yes, the Korean bankers are looking at themselves. Their only concern is the commission they can make from brokering the sale of the bonds. The more customers/clientele they have, the more access to deals they can get.
This is really not an Apple story at all, but one about Korean investment banks.
That is an amazing idea, congrats who ever in Korea started that false rumor just to increase the price of its bonds.
That is a great idea, start a crappy company or something and spread rumors that apple is interested in your company. well, in this case, in your country.