Apple eyeing first-ever bond offering in Japanese yen worth $1.62 billion

Apple could issue 200 billion yen, or $1.62 billion U.S., in Japanese bonds as soon as June, marking its first ever debt sale in the country, a report said on Tuesday.

Apple is looking to exploit Japan's extremely low interest rates, said local business publication Nikkei, which noted that the company could be in a position to set its rate one percentage point lower than in the U.S., saving on costs even after a conversion back to dollars. Proceeds are expected to go towards funding Apple's cash return program for shareholders, and possibly to grow Japanese operations.

The company reportedly started gauging interest in bonds earlier this month by talking to regional banks, life insurance firms, and various other institutional investors. Although the company is thought to be seeking out Japanese investors first and foremost, overseas investors may be able to participate.

In the past few years Apple has engaged in bond sales in both the U.S. and Europe to help finance its cash return program, which through dividends and buybacks should see $200 billion delivered to shareholders by the end of March 2017. Although the company could conceivably spend some of its $178 billion in cash reserves, it has preferred to leave most of that stockpile intact.

So far, the biggest Japanese bond sale by a foreign company was issued by Citigroup in 2007. The financial firm sold bonds cumulatively worth 270 billion yen, or just under $2.2 billion.

2 Comments

gatorguy 24602 comments · 13 Years

About 9 years ago

Cheaper even than the package they apparently got here in the US? Wow. The 2013 US loan agreement for stock buy-backs had incredibly low interest rates. [B]EXECUTION COPY Apple Inc. $1,500,000,000 0.45% Notes due 2016 $1,000,000,000 Floating Rate Notes due 2016 $4,000,000,000 1.00% Notes due 2018 $2,000,000,000 Floating Rate Notes due 2018 $5,500,000,000 2.40% Notes due 2023 $3,000,000,000 3.85% Notes due 2043 Underwriting Agreement April 30, 2013 Goldman, Sachs & Co. Deutsche Bank Securities Inc., As representatives of the several Underwriters named in Schedule I hereto, c/o Goldman, Sachs & Co. 200 West Street, New York, New York 10282-2198 and c/o Deutsche Bank Securities Inc. 60 Wall Street New York, NY 10005 Ladies and Gentlemen: Apple Inc., a California corporation (the "Company"), proposes, subject to the terms and conditions stated herein, to issue and sell to the Underwriters named in Schedule I hereto (the "Underwriters") $1,500,000,000 aggregate principal amount of the Company's 0.45% Notes due 2016 (the "2016 Fixed Rate Notes"), $1,000,000,000 aggregate principal amount of the Company's Floating Rate Notes due 2016 (the "2016 Floating Rate Notes"), $4,000,000,000 aggregate principal amount of the Company's 1.00% Notes due 2018 (the "2018 Fixed Rate Notes"), $2,000,000,000 aggregate principal amount of the Company's Floating Rate Notes due 2018 (the "2018 Floating Rate Notes"), $5,500,000,000 aggregate principal amount of the Company's 2.40% Notes due 2023 (the "2023 Notes") and $3,000,000,000 aggregate principal amount of the Company's 3.85% Notes due 2043 (the "2043 Notes," and together with the 2016 Fixed Rate Notes, 2016 Floating Rate Notes, 2018 Fixed Rate Notes, 2018 Floating Rate Notes and 2023 Notes, the "Securities").... ... 2. Subject to the terms and conditions herein set forth, the Company agrees to issue and sell to each of the Underwriters, and each of the Underwriters agrees, severally and not jointly, to purchase from the Company the respective principal amount of Securities set forth opposite the name of such Underwriter in Schedule I hereto at a purchase price of 99.669% of the principal amount of the 2016 Fixed Rate Notes, 99.850% of the principal amount of the 2016 Floating Rate Notes, 99.431% of the principal amount of the 2018 Fixed Rate Notes, 99.800% of the principal amount of the 2018 Floating Rate Notes, 99.567% of the principal amount of the 2023 Notes and 98.718% of the principal amount of the 2043 Notes, plus, in each case, accrued interest, if any, from May 3, 2013 to the Time of Delivery (as defined below) hereunder."[/B] FWIW Goldman Sachs funded the vast majority of it (roughly 2/3rds of the total) tho there's another six financial institutions involved too. Anyway, I'm surprised Apple can do even better than that borrowing in Japan. Well done if so!