“After five years of rapid growth in corporate bond issuance, technology companies are expected to issue less debt in 2018 as they start to bring cash parked overseas back to the U.S.” Ciara Linnane reports for MarketWatch. “That’s according to CreditSights analysts in a new report that forecasts that companies, including Apple Inc., Broadcom Ltd. and Microsoft Corp., will stop the practice off issuing bonds to raise the funds for shareholder rewards and repatriate foreign earnings instead.”

“Companies opted to raise debt domestically, rather than pay the 35% tax rate that overseas cash was subjected to under the former tax regime. The tax bill signed into law by President Donald Trump in December has changed the math, even though the repatriation rate is higher than previously expected at 15.5% for cash and 8% for illiquid securities,” Linnane reports. “‘We expect IG tech issuance to be down year-over-year for the first time in about eight years,’ analysts led by Jordan Chalfin wrote in the report.”

“Oracle Corp. and Apple squeezed in bond deals in November, just ahead of the passage of the tax-code redo, in what Chalfin called ‘a last hurrah,'” Linnane reports. “Apple was the biggest tech issuer in 2017, selling $30 billion of dollar-denominated debt, driven entirely by its massive shareholder returns program, which includes dividends and stock buybacks. CreditSights is expecting the iPhone maker to refinance the $6.5 billion of bonds that are maturing this year.”

Read more in the full article here.

MacDailyNews Take: The era of big corporate debt is over.

SEE ALSO:
Apple to tap debt market with six-part bond deal that could raise $7 billion – November 6, 2017
Congressional Republicans deliver epic overhaul of U.S. tax laws to President Donald Trump – December 20, 2017
Republican-controlled U.S. Congress poised to approve biggest tax system overhaul in 30 years – December 19, 2017
GOP tax cut plan sets 15.5% repatriation rate on offshore cash; 8% if invested in plants and equipment – December 16, 2017
GOP eyes taking bigger bite from Apple, others holding cash overseas to seal President Trump’s tax cuts – December 15, 2017
Apple could be biggest beneficiary of Republican tax reform plans, saving at least $47 billion – December 6, 2017
Dow soars 203 points higher to record as Wall Street cheers U.S. Senate passage of major tax bill – December 4, 2017
Oracle joins Apple in support of President Trump’s tax repatriation plan – November 7, 2017
President Trump’s tax cuts could be YUGE for Apple – September 28, 2017
GOP tax plan calls for cutting the corporate tax rate from 35 percent to 20 percent – September 27, 2017
Goldman Sachs sees $1 trillion in U.S. tax cuts coming – September 20, 2017
Apple will eventually bring billions of dollars back to the U.S. under President Trump’s tax reform plan – July 21, 2017
President Trump’s tax reform plan includes deep cuts in corporate taxes – April 26, 2017
Apple could be primed for profit explosion under President Trump’s big tax cut – April 26, 2017