AppleInsider Staff
Apple will reportedly continue to diversify its corporate debt issuance strategy with a new bond denominated in Australian dollars, the company's latest move to raise debt outside the United States in order to fund its growing capital return program.
Apple is expected to raise at least A$500 million ($369 million), but the offering could go as high as A$1 billion, one Australian banker told Reuters. If it trends toward the higher end of that range, it would be among the largest bonds ever floated in the Australian market.
There is no word on when the so-called "Kangaroo" offering could take place, but Apple will likely begin calls with investors on Tuesday.
Apple issued its first foreign currency bond last November, raising $3.5 billion with a euro-denominated offering. That was followed by a $1.08 billion Swiss franc bond in February of this year, a $2 billion yen debut in June, and a $2 billion sterling issue in July.
The bonds are primarily used to fund Apple's massive capital return program, which is targeted to hand $200 billion back to shareholders through dividends and buybacks by the end of March 2017. While Apple has more than $220 billion in cash and marketable securities, much of it — Â more than $190 billion — Â is held in its foreign subsidiaries.
Thanks to U.S. corporate tax policy, which would require Apple to pay another round of taxes on that money if it were to come back to the U.S., issuing debt is significantly less expensive than repatriating Apple's foreign cash.
Andrew Orr
Amber Neely
William Gallagher
Christine McKee
18 Comments
Maybe they are issuing bonds in currencies they expect the US dollar to rise relative to, so that when they have to give the investors their money back in X years time, it will be fewer US dollars.
Maybe they are issuing bonds in currencies they expect the US dollar to rise relative to, so that when they have to give the investors their money back in X years time, it will be fewer US dollars.
Hmm, difficult to imagine the US dollar continuing to rise without seriously damaging the US economy. But I guess it just makes sense to hedge the debt across a range of currencies: they won't win, but they also won't lose.
Not sure I understand why they are doing this. I can understand issuing bonds in Swiss Francs and Euros as interest rates are almost non existent, but that is not the case in Australia where it's 2% . I can't see Apple bonds offering even close to that. I can get 2.5% on money just sitting in a bank account. Apple's bonds would have to match or exceed that to interest me.
I get the feeling Apple cares more about managing its massive wealth more than its products now. Such is the price of success.
[quote name="s.metcalf" url="/t/187744/apple-prepping-first-australian-dollar-denominated-bond-offering-report#post_2762188"]I get the feeling Apple cares more about managing its massive wealth more than its products now. Such is the price of success.[/quote] That's an absurd comment. Profits and managing money are fundamental to all businesses.