At its last earnings call, Apple announced that it is expanding its capital return program by more than 50%. This means the company is now looking to repurchase over $140 billion worth of shares and a larger dividend for shareholders.
To fund this activity however, it is cheaper for the company to sell domestic company debt than repatriate its ever-increasing cash hoard that is ‘trapped’ overseas. Therefore, Apple has today announced it will issue a new 7-part bond to raise the funds.
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As the company has the second best credit rating possible, second only to nations, it can offer bonds at a relatively cheap rate. Although counterintuitive, it is significantly cheaper than repatriating foreign funds and paying US tax on its international cash.
The new 7-part bond is being managed by JP Morgan, Bank of America, Merrill Lynch and Goldman Sachs. The exact rates for the bonds, with maturities ranging from two to thirty years, will be disclosed later today.