“A whale in the corporate bond market is going on a diet,” Molly Smith reports for Bloomberg. “Apple Inc.’s holdings of company debt shrank in the latest quarter for the first time since 2013, as the maker of the iPhone adjusts to new tax laws. The tech company held about $136 billion of corporate bonds as of the end of March, representing about half its pile of cash and securities, according to a filing this week. Its holdings of mortgage bonds and asset-backed securities also fell, the filing showed.”

“The new U.S. tax law is likely to end a strange debt circle that helped fuel purchases and sales of corporate bonds for years. Previously, companies with extensive profit earned overseas, like Apple and Alphabet Inc., would end up being both big buyers of corporate debt and big issuers of the obligations,” Smith reports. “The buying stemmed from the money the companies had earned abroad that would be taxed if it were brought back to the U.S. Instead, they would invest at least some of that money in short-term corporate bonds. Those companies would also borrow in the U.S. corporate bond markets to fund share buybacks and other cash needs. Apple was the third-largest issuer of corporate bonds last year.”

“Under new laws, there’s no benefit to keeping money overseas, meaning companies like Apple can just move profit back to the U.S. without the bond markets intermediating. The effects of that change are showing up in corporate debt markets.,” Smith reports. “Issuance for high-grade bonds has fallen 7 percent this year through Thursday, compared with the some period last year, in part because Apple hasn’t sold any bonds this year.”

Read more in the full article here.

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

Apple expected to issue less debt in 2018 now that President Trump has signed the Tax Cuts and Jobs Act – January 16, 2018
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

[Thanks to MacDailyNews Reader “Dan K.” for the heads up.]