Apple gearing up for sale of seven-part bond to fund share buybacks and dividends

Apple on Wednesday notified the U.S. Securities and Exchange Commission that it is planning yet another bond sale, accruing debt to fund its ongoing quarterly dividend payments and share repurchase program.

The Apple capital reinvestment program has been fueled in part by debt taken on by the company, and this latest round of share buybacks will be no different.

In the preliminary filing, Apple revealed its seven-part bond offering will feature floating rate notes due in 2017 and 2020, while the remaining fixed-rate notes will range from 2017 to 2045.

The bond sale will be operated by joint book running managers Goldman Sachs, Bank of America Merrill Lynch, and J.P. Morgan. Pricing on the bonds has not yet been revealed.

The company announced last week that it plans to add $50 billion to its massive capital return program, growing the share buyback component to $140 billion. That came alongside an 11 percent bump in its quarterly dividend paid to shareholders.

In total, Apple plans to return some $200 billion to shareholders by the end of March 2017. The company has already returned $112 billion since 2012, including $80 billion in stock buybacks.

The dividend will rise to 52 cents per share for shareholders of record as of the close of business on May 11. The previous dividend, paid in February, was set at 47 cents.

35 Comments

lkrupp 10521 comments · 19 Years

About 9 years ago

I’m ignorant. Can the general public buy these bonds? If so, how?

linkman 1040 comments · 11 Years

I'll never understand economics and financials enough to get a grasp on things like this. Companies with huge amounts of cash on hand borrow money? As an individual I would never take out a loan for something if I had sufficient cash. To scale it down: Apple has about $180B on hand and has $29B in long-term debt. Assume I have $180k on hand and want to purchase a $29k car. I would never take out a loan for that car even if it were a very low interest rate.

greginprague 492 comments · 13 Years

Does anyone know what Apple's total outstanding debt currently is? When talking about Apples total cash stockpile does the debt amount get reduced from that before the number is reported?

Quote:

Originally Posted by linkman

I'll never understand economics and financials enough to get a grasp on things like this. Companies with huge amounts of cash on hand borrow money? As an individual I would never take out a loan for something if I had sufficient cash. To scale it down: Apple has about $180B on hand and has $29B in long-term debt. Assume I have $180k on hand and want to purchase a $29k car. I would never take out a loan for that car even if it were a very low interest rate.

The vast majority of the "cash on hand" is held overseas and can't be paid as dividends or buybacks without repatriating it and paying the 35% US tax. That seems to be the main reason why they issue bonds.