“Apple Inc. issued $7 billion of debt on Monday, in its latest fundraising to finance a $300 billion shareholder rewards program,” Ciara Linnane reports for MarketWatch. “Apple issued 2-year, 3-year, 5-year, 7-year, 10-year and 30-year fixed-rate notes with the 10-year tranche pricing at 72 basis points over comparable Treasurys, according to CreditSights, or about 10 basis points in new issue concession, the discount institutional investors are granted to encourage them to buy the deal.”
“In September, the company sold $5 billion of corporate bonds, with the 10-year tranche pricing at 85 basis points over Treasurys,” Linnane reports. “‘We would participate in the new issues as long as there are still some NICs at launch (i.e. if the 10-year prices at Treasurys plus 65 basis points or wider),’ analyst Jordan Chalfin wrote in commentary.”
“Proceeds of the deal will be used for the catchall ‘general corporate purposes,’ which again include share buybacks and dividend payments,” Linnane reports. “Apple has repeatedly borrowed in the corporate bond market to reward its shareholders, rather than repatriate some of the $252.3 billion in cash CFO Luca Maestri said last week Apple holds overseas, which would be subject to a 35% tax rate if brought back to the U.S. ‘The timing is good for Apple given its excellent fourth-quarter results and strong initial indications for iPhone X demand,” Chalfin wrote. “However, it’s unusual for Apple to be so active in the debt markets in the second half of the calendar year. Apple is clearly not waiting on tax reform which the GOP is hoping to be effective for January 1, 2018.'”
Read more in the full article here.
MacDailyNews Take: Hopefully, Apple will be able to use their repatriated cash reserves for dividends and buybacks starting next year.
I own $APPL and am quite pleased to hear “shareholder rewards”. Big fan of the company and showing appreciation to owners.
Apple could provide a credit union service to its employees and offer financial services like banking, savings, ad nauseam and then I’d have to go live with Apple, or at the very least set up direct deposit for the iTunes Store.
Go AAPL!
Jeez. I know it’s necessary for Apple to have to add more debt for dividends and stock buybacks but I really wish that tax reform would go through so they wouldn’t have to keep doing this.
I don’t understand how Microsoft is able to manage all those dividends without having to constantly take on debt. MSFT has 7.7B outstanding shares compared to Apple’s 5.1B shares. Apple is more profitable than Microsoft so I’m guessing Apple profits are mostly made overseas and that’s the reason for Apple to keep taking on debt while Microsoft doesn’t need to.
Although I realize Apple is taking advantage of low-interest rates and I’m sure Apple will easily be able to pay that money back, I’m just a conservative person who doesn’t feel comfortable with companies taking on debt. Anyway, I hope that tax reform takes place sometime next year, but it’s not something that can be guaranteed to happen.
but there is such a thing as good debt and bad debt. Since Apple has the means to completely pay off its corporate bonds with $150B or more left over, it is simply a matter of taxation. Most of the cash and securities are located overseas, and Apple needs cash in the U.S. to pay for stock buybacks and dividends. Since the interest rates are historically low, Apple is in a great position to borrow money.
I would hazard a guess that most companies carry debt (although Apple was debt-free for years under Steve Jobs). But few of them could as easily retire their debt load as Apple. Apple has been betting on a tax repatriation holiday and/or corporate tax reform for years, and it may finally come true in some form. In my opinion, however, any U.S. tax reform effort should target a revenue neutral or revenue positive outcome. With a huge debt and large deficit, this is not a wise time to cut tax revenues as proposed by the Republican Congress and Administration. Any growth that results from a tax cut will take years and will never offset the ~$1.5T in lost revenue predicted over the next decade. Even during the Reagan years in which the economy greatly benefited from a drop from historically high interest rates in the early 1980s, the growth did not offset the cost. Reagan eventually approved tax increases as a result. Look it up and learn. Trickle down economics is a fantasy promoted by the wealthy and the politicians feeding off of the wealthy. A more balanced economy with a strong middle class is much more conducive to long term economic health along with fiscal responsibility at the local, state, and federal levels.
You may recall that Republicans used to preach fiscal responsibility — they need to back up that speech with action.
“Reform” — really. More like a $1T gift to the hyper-rich.
Even if it passes, how would it be more advantageous to Apple then what it’s doing now?
I told you not to be stupid, you moron.
What makes you confident the Grand Old Pedophiles are capable of passing any tax reform? Trump tweets endlessly about how this is supposed to help the middle class and employers but if that were true, the bill would reduce PAYROLL TAXES. No, this bill benefits Trump and his slimy swamp creature friends at the expense of everyone else, including your children. $1.7 billion added to debt at a time when corporations are awash in cash. The GOP has no clue.
“The GOP has no clue.”
Yet, they control:
• The White House
• The Senate
• The House
• The Supreme Court
• The Governorships
• The State Houses
but, congratulations on electing a transgender to a blue state legislature…
TRUMP IS DOOMED!
PS: Libtard Kevin Spacey was sighted today at a local Walmart, he didn’t want to miss the Boys’ Underwear Half-Off Sale.