Apple cutting back on bond buys ahead of plans to repatriate foreign cash

As it gets ready to bring billions in foreign cash back to the U.S., Apple is also reportly drawing back on its purchases of corporate bonds.

Some $157 billion of Apple's $285 billion in cash reserves are sunk into corporate debt, making it one of the world's leading lenders, Bloomberg said on Tuesday. Sources didn't offer any more details, except to note that other major tech companies like Alphabet and Oracle are also holding off on bond buys.

At least some of the businesses are taking advantage of a drastic tax cut on repatriated money and liquid securities by the Trump administration, down from 35 percent to just 15.5 percent. While Apple has regularly clashed with Trump and the Republican Party on issues like immigration, privacy, and LBGT rights, it has eagerly accepted the corporate tax break.

The company is expecting to pay a $38 billion bill on the repatriated money, which it's counting towards plans to pump $350 billion into the U.S. economy within the next five years. Some of the company's investments will include a new campus, 20,000 jobs, and more domestic manufacturing.

Apple long refused to bring cash back to the U.S. unless it was granted a tax "holiday," something its lobbyists actively campaigned for. The Obama administration never backed down, presumably worried about hurting government budgets.

23 Comments

eightzero 14 Years · 3148 comments

About 6 years ago

I think their plan is to stop selling bonds, not buying them, right? IOW, they will stop issuing debt?

MacPro 18 Years · 19845 comments

Saying Apple has 'eagerly accepted' the corporate tax break is a little disingenuous wording, Tim had been lobbying for such a tax break for years.

maestro64 19 Years · 5029 comments

MacPro said:

Saying Apple has 'eagerly accepted' the corporate tax break is a little disingenuous wording, Tim had been lobbying for such a tax break for years.

yes, and to be a little more accurate and I love Tim for this, Congress and in their typical dog and pony show to try and prove to the people they were doing something, they drag Tim in front of the camera's and make an example of him and get him to admit they were doing something morally wrong possibly illegal. Only to have Tim turn it around and said he only following the laws they put in place, and those law do not tax money made outside the US. He said if they want a different outcome they need to change their laws and only they could change the laws. He was not really advocating the tax reduction to bring the money home. In some regards it actually better for apple to take on the debt since it reduce overall taxes in the US.

williamh 13 Years · 1048 comments

eightzero said:

I think their plan is to stop selling bonds, not buying them, right? IOW, they will stop issuing debt?

That was my first thought. However, on further reflection - the focus of the article is on Apple's cash. The article mentions that apple is one of the world's leading lenders, etc. So this is about Apple investing its cash in corporate bonds. Apple is simultaneously buying bonds (overseas, un-repatriated earnings) and selling bonds (US, US-earned or repatriated earnings). I'd assume they cut back on both as there would not be so much need to do that.

fallenjt 13 Years · 4056 comments

eightzero said:

I think their plan is to stop selling bonds, not buying them, right? IOW, they will stop issuing debt?

Nope. Apple has been using cash abroad to purchase US corporate bonds instead of repatriating it. That's one of the legal investments with cash available outside of US. It's not Apple bond.