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Apple reportedly horning in on corporate bond issues, bypassing asset management firms

Apple is among an elite cadre of cash-rich tech companies buying up corporate debt as a way to grow their coffers without befalling U.S. repatriation taxes, a report said Friday.




Citing sources with knowledge of the investments, Bloomberg reports Apple, Oracle, Google and seven other tech firms are sinking vast sums into corporate bond offerings.

With U.S. short-term interest rates hovering at near zero percent, debt markets have become increasingly attractive options for traditional investment managers, and it appears Apple agrees. People familiar with Apple's dealings said the company is now one of the biggest investors of short term bonds, at times buying $200 million of a $1 billion issue.

With more than $500 billion in assets, the companies are collectively giving established investment firms like Pacific Investment Management Co. (Pimco) a run for their money. The report said investing tech companies sometimes purchase as much as half of a bond issuance, making them competitors to investment firms that would traditionally serve as their money handlers.

As for offshore holdings, Bloomberg discovered representatives from Australia's biggest banks are being sent to Reno, Nev., where Apple's asset management subsidiary Braeburn Capital is located. Oracle is also known to field cash managers in the city.

The firms have reportedly channeled investments toward financial entities and well-rated companies like Exxon, Merck and Walmart. Recent buys have focused on investment-grade securities set to mature in two to three years, sources said.