AppleInsider Staff
Apple this week issued a $3.5 billion, U.S. dollar-denominated bond to pay for its capital return program, outstanding debt, acquisitions and other operational expenses, according to a Securities and Exchange Commission filing.
The latest debt issuance is an add-on to Apple's $12 billion bond sold in February, which consists of three notes offerings maturing in 2021, 2026 and 2046.
Breaking the offering down by yield, Apple issued $750 million of its 2.25 percent notes maturing in 2021, $1.25 billion in 3.25 percent notes due in 2026 and $1.5 billion of its 4.65 percent notes due in 2046.
As a reopening of last month's notes, the company is earmarking proceeds for common stock repurchases and dividends payouts, funding for working capital, capital expenditures, acquisitions and repayment of debt. Apple estimates net proceeds of $3.64 billion after deducting expenses.
Underwriting Apple's bond are Goldman Sachs, Bank of America Merrill Lynch, Deutsche Bank Securities and J.P. Morgan. Co-managers include Barclays, Standard Chartered Bank, Wells Fargo Securities, CastleOak Securities, L.P., Drexel Hamilton, Loop Capital Markets and Ramirez & Co., Inc.
Apple has turned to debt markets instead of repatriating its gigantic offshore cash hoard to help finance its $200 billion capital return program, which stood at $153 billion paid at the end of the 2015 calendar year. At the end of December the company's foreign subsidiaries held over $200 billion in cash, cash equivalents and marketable securities which, if brought back into the U.S., would be subject to high tax rates.
Prior to February's bond Apple issued a euro-denominated offering worth $2.25 billion in September. The company has also sold bonds denominated in Japanese yen, Swiss francs, British pounds and Australian dollars.
Andrew O'Hara
Malcolm Owen
Wesley Hilliard
William Gallagher
Christine McKee
6 Comments
...and why would they repatriate any oversea's profits at the cost of 35% when they can do bonds at 2.5% or less? seriously..
Doesn't take a math major to see Tim Cook would/should be fired for throwing away 33% of anything brought back into the states.
Most countries are between 5-15% repatriation rates. Candida dropped to around 10%. It costs Samsung around 5% to take their international profits back to their homeland. The US is the single highest repatriation rate in the world. /shrug. So duh.. yeah.. this is gonna happen.
A LOT of people confuse repatriation rates with the double tax Irish loophole .. Completely different subject than repatriation.
So shareholders are going to have Apple constantly taking on debt for continued buybacks because it's unlikely there will be any repatriation tax holiday on the horizon. Apple keeps buying back shares and the stock barely moves as the analysts complain Apple's EPS isn't high enough. Meanwhile, the big investors keep pouring money into Tesla which has a negative EPS and the stock climbs about 2% every day as the company burns cash as though it was firewood. Go figure.
and none of this increases the share price so there is no incentive on management to do this :D