Apple Completes $12 Billion Bond Offer

| Apple Stock Watch

MoneyApple Inc. completed a US$12 billion bond offering Tuesday, an effort led by Deutches Bank and Goldman Sachs, according to Bloomberg. Reuters reported that Apple issued three, five, seven, and 10-year fixed rate notes along with three-year and five-year floaters.

Reports on Monday said that Apple might tap the European bond markets for the offering, but it ended up doing so in the U.S. after all. The company might make another offering later, however, as Apple CFO Luca Maestri said that his company was planning on matching 2012's $17 billion bond offering this year.

Like every other product launch for Apple, Demand for the bonds outstripped supplies. According to Reuters, there was between $35 and $40 billion in orders for the $12 billion offering. Apple was offering 3.45 percent, or roughly 77 basis points (0.77 percentage points) above government rates. In other words, investors gobbled it up.

Apple plans on using the money for increased dividends and share buybacks. While Apple has some $150 billion in cash, 88 percent, or $132 billion, is overseas. Borrowing money at 3.45 percent costs much less than paying 35 percent in taxes to bring the money it already has to the U.S.

Shares of $AAPL ended the day lowers at $592.33, down $1.76 (-0.30 percent), on volume of 12 million shares trading hands.

*In the interest of full disclosure, the author holds a tiny, almost insignificant share in AAPL stock that was not an influence in the creation of this article.

Comments

RonMacGuy

Hey Bryan, your ‘tiny, almost insignificant share in AAPL stock’ will soon increase by a factor of 7!!

Bryan Chaffin

Well, technically, it will still be the same, tiny, almost insignificant share. smile

Lee Dronick

I wish that I had a significant share of AAPL shares. smile

I have a friend here in San Diego that bought quite a bit of QualComm when it was a small company. She is doing quite well now.

Constable Odo

For a company people are always trying to say is in trouble, there seems to be quite a bit of demand for those bonds.  I’d sure like to know what Apple intends to do with all that overseas cash.  It’s unlikely there’ll be a repatriation tax holiday anytime soon.

Lee Dronick

  It’s unlikely there’ll be a repatriation tax holiday anytime soon.

I would support one.

skipaq

It sure would be an intelligent move to have offshore money brought home for whatever tax rate that business would be willing to pay. Alas, there just isn’t much intelligence in Washington to do something smart.

Lee Dronick

  Alas, there just isn’t much intelligence in Washington to do something smart.

Too much influence from big business, otherwise Congress would probably do it.

RonMacGuy

At least they should open it up for negotiation.  US Government gets some tax income, and companies get a tax break.  Could be a win-win instead of companies just sitting on billions overseas.

Don’t just let Apple decide on the rate - make it an offer/counteroffer situation.

Lee Dronick

Exactly Ron, make them a good a deal. Then fix the offshore tax haven problem.

Log-in to comment