Apple lays groundwork for first ever debt sale; one of the year’s most anticipated bond sales

“Apple took initial steps Monday for what would be its first debt sale ever, as the US computer giant lays the groundwork for what would be one of the most anticipated bond sales of the year,” Josie Cox reports for Reuters. “The company was to begin investor calls today led by Deutsche Bank and Goldman Sachs, a source familiar with the situation told IFR, and filed SEC paperwork for a debt offering.”

“The only major tech company without a penny of debt on its books, Apple stunned the markets last week by announcing it could sell debt for the first time to help fund a $100 billion capital return program for shareholders,” Cox reports. “Any bond offer from the makers of the iconic iPhone and iPad would be highly sought after by investors, and it is believed the company could raise funds at a cheaper rate than even Triple A rated Microsoft… It was not known if the company would look to issue debt in dollars, sterling, euros or some mix of currencies.”

Cox reports, “As it unveiled its first quarterly profit decline in more than a decade last week, Apple said it plans to buy back some $60 billion of shares over the next three years. According to analyst estimates, Apple has $145 billion of cash – but only $45 billion on hand in the US, and thus not enough to fully fund the share buy-back program.”

Read more in the full article here.

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7 Comments

  1. I don’t understand why Apple can’t buy stock with overseas money using a foreign investing company that is holding their money overseas. This wouldn’t be the same as buying back the stock, but would have much of the same effect. This would make it unnecessary to issue the debt. The stock would not be retired but there is no real need to do so as it would be held by a stable investor and they could hold it in a cash account to prevent short sellers borrowing it. There may be a SEC regulation against such foreign held investment by the same company, but it is surely worth a check.

    1. “There may be a SEC regulation against such foreign held investment by the same company, but it is surely worth a check.”

      So you are under the impression that Oppenheimer and his team have not done the appropriate diligence? And that the BOD gave him a pass on that?

    2. Since this could save on paying the tax on repatriated foreign income, which might be around 30%, this would be an obvious notion to explore. I am confident Apple and other US multinationals have explored this potential loophole. Clearly, it’s not possible.

  2. This is not Apple’s first-ever debt sale. The company had a pretty heavy debt burden when Steve returned, and I remember the announcement he made when that debt was closed out.

    -jcr

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