Apple launches another $7 billion bond sale to fund stock buyback, other programs

Apple continues to leverage bond sales and low interest rates to fund both its stock buyback program and green initiatives, with an upcoming $7 billion sale to hit U.S. debt capital markets.

Detailed in a filing with the Securities and Exchange Commission on Nov. 6, Apple's latest bond sale is comprised of six note offerings set to mature in 2019, 2020 and 2023, 2025, 2027, and 2047.

The first note matures on Nov. 13, 2019 and is a $1 billion note at 1.5 percent. The second note is also for $1 billion but at 1.625 percent and matures on Nov. 13, 2020.

The third note matures on Jan. 13, 2023, and is for $750 million at 2 percent. The fourth offering is for $1.5 billion at 2.25 percent and matures on Jan. 13 2025.

Note five matures on Nov. 13, 2027, and is a $1.5 billion offering at 2.25 percent. The final note from this offering is due in 30 years, is worth $1.25 billion, and has a rate of 3 percent.

As it has in the past, Apple has turned to Goldman Sachs, J.P. Morgan, Merrill Lynch, Deutsche Bank, and Morgan Stanley for management.

Apple's last bond sale was worth $5 billion, and was declared in September. The company is thought to be about 75 percent of the way through its capital return program.

The company has turned to bond sales around the world to fuel assorted programs, including Australia, Japan and Canada.

31 Comments

melgross 33605 comments · 20 Years

About 7 years ago

I wish they would stop buying stock back. The shares are already high. I’d rather they somehow figure out a way to increase dividends to the market average of those that do offer them. As the shares rise, the dividend percentage decreases.

the idea of ever increasing debt, already over $100 billion, for just this purpose, really bothers me.

robin huber 4025 comments · 22 Years

melgross said:

I wish they would stop buying stock back. The shares are already high. I’d rather they somehow figure out a way to increase dividends to the market average of those that do offer them. As the shares rise, the dividend percentage decreases.

the idea of ever increasing debt, already over $100 billion, for just this purpose, really bothers me.

What is the endgame here? Is it really possible to buy back all their stock? I own shares; can they force me to sell them?

GeorgeBMac 11421 comments · 8 Years

Not to trash Apple -- but I am very suspicious of any company that borrows money in order to pay dividends or other types of payments to stock holders... Most financial advisors agree it is, generally speaking, a highly suspicious strategy often used to artificially boost a stock price.

Generally, Dividends should be paid from earnings -- not borrowings.

That being said: Not knowing Apple's overall investment strategy -- and knowing that they don't tend to do stupid things, I am inclined to give them the benefit of the doubt.

Rayz2016 6957 comments · 8 Years

GeorgeBMac said:

Not to trash Apple -- but I am very suspicious of any company that borrows money in order to pay dividends or other types of payments to stock holders... Most financial advisors agree it is, generally speaking, a highly suspicious strategy often used to artificially boost a stock price.

Generally, Dividends should be paid from earnings -- not borrowings.

That being said: Not knowing Apple's overall investment strategy -- and knowing that they don't tend to do stupid things, I am inclined to give them the benefit of the doubt.

From what I understand, it’s much better for them to leverage ridiculously low interest rates than to take a massive tax hit trying to repatriate the money for dividend payouts.

blastdoor 3564 comments · 15 Years

melgross said:

I wish they would stop buying stock back. The shares are already high. I’d rather they somehow figure out a way to increase dividends to the market average of those that do offer them. As the shares rise, the dividend percentage decreases.

the idea of ever increasing debt, already over $100 billion, for just this purpose, really bothers me.

They have the cash to pay off all that debt, it's just sitting in foreign accounts. If it wasn't for the oddities of tax law, they wouldn't be issuing debt at all.

The thing that bothers me more about it is that management isn't able to come up with good ideas for how to productively employ all of this capital. I think Amazon is overvalued, but I will say this -- at least they know how to reinvest profits to grow the business.