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.
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.
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Reblogged this on Mohit – The caretaker.
Says a lot when it is cheaper to do bonds than to just bring back the off shores cash and use it.
Agreed, you would think they would change the tax laws.
A little piece of the pie is better than no piece at all.
Not only is it cheaper, but the interest on the bond is tax deductible. Give the US gov a double FU! No tax on Apple’s off shore cash, and a tax break on interest! LOL
Imagine an Apple Inc. that doesn’t have to be concerned with the kuckleheads on The Street and their unrealistic forecasts.