Apple is selling $14 billion of debt to take advantage of cheap borrowing costs, tapping the bond market for a third time since May as the company looks to return more cash to shareholders.
Jack Pitcher for Bloomberg News:
The company is issuing debt in six parts, according to a person with knowledge of the matter. The longest portion of the offering, a 40-year security, will yield 95 basis points above Treasuries, after initially discussing between 115 and 120 basis points, said the person, who asked not to be identified as the details are private.
Until 2020, Apple hadn’t borrowed in the U.S. investment-grade market more than once in a calendar year since 2017. But rock-bottom interest rates are proving too tempting for the world’s most valuable company to pass up as it pursues aggressive share buybacks and dividends.
The tech giant said it will use the proceeds for general corporate purposes, including buying back stock and paying dividends. It may also be used in funding for working capital, capital expenditures, acquisition and repayment of debt, the person said.
After years of hoarding cash, Apple has been working to reduce its net cash position, largely through payouts to stockholders. Still, the company may need to expand its annual shareholder returns to over $100 billion to reach its net-cash neutral target over the next few years, according to Bloomberg Intelligence.
MacDailyNews Take: Near the end of April, with Apple’s fiscal Q221 earnings release, we’ll find out what Apple’s board of directors does with the cash dividend (currently $0.205 per share of common stock) and what sort of increase they commit to the existing share repurchase program.