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Monday, April 28, 2014, 05:26 am PT (08:26 am ET)

Apple preparing $17B bond sale to help fund massive share buyback

A year after it turned to the bond markets to fund its capital repurchase program, Apple is planning to do the same yet again, with a sale price that would reportedly be the second highest in corporate history.

Bond


Apple has another massive $17 billion bond sale in the works that would target both the U.S. and foreign markets, according to the Financial Times. That cash will help the company increase its share buyback efforts, which were announced last week to be surging to $90 billion through the end of 2015.

Apple Corporate Comptroller Luca Maestri said last week that his company would likely raise "an amount of term debt financing similar to what we used in 2013." It was last April that Apple announced a six-part $17 billion bond offering that at the time was the largest in corporate history.

That bond sale has since been surpassed by Verizon's sale of $49 billion bonds in 2013. But if Apple were to exceed its sum from last year, it would rank as the second-highest bond sale in history.
Apple has taken on debt to help fund its share buyback program, allowing it to keep a strong domestic cash position without repatriating (and paying high taxes) on overseas money.
Though Apple has some $150 billion in cash, almost all of that — $130 billion — is held overseas. Executives from the company have signaled numerous times, including last week, that they have no plans to repatriate the overseas cash, citing high tax rates for bringing the money to the U.S.

Apple would not only need to buy back shares with domestic cash, but company executives also plainly stated that they would like to stay with a liquid cash position to allow flexibility for options like research and development investments, as well as acquisitions.

For its foreign debt sale, Apple is likely to target the eurozone for low interest rates, according to the Times. This would allow the company to diversify its base, and also help prevent saturation of the U.S. debt market with such a large sale.