Apple to Raise Up to $12 Billion in Debt to Fund Capital Return Program

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Apple-BondsApple has filed a preliminary prospectus supplement with the U.S. Securities and Exchange Commission as it prepares to issue a $10-$12 billion bond sale, reports CNBC. The debt raised will fund Apple's capital return program, including continued stock buybacks and dividend payments to shareholders, and general corporate purposes such as the repayment of debt and acquisitions.

Apple will be offering floating rates that mature in 2018 and 2019, in addition to fixed rates that mature between 2018 and 2046. Apple's proposed 30-year bond due in 2046 may yield 2.15 percentage points more than similar-maturity Treasuries, according to Bloomberg. Apple is also planning to issue seven-year green bonds, typically used for clean energy and other sustainable initiatives, the report claims.

Apple's capital return program currently runs through March 2017, as announced last year. The company has returned $153 billion in capital to investors of its $200 billion currently authorized, so the iPhone maker will almost certainly need to raise debt through this bond sale in order to continue stock buybacks and dividend payments before setting a new authorized amount as soon as April.

Apple held $215.7 billion in cash and marketable securities, partially offset by $53.2 billion in long-term debt, as of the first fiscal quarter of 2016, but a significant portion of that money is held overseas and would be subject to high U.S. taxes upon repatriation. By raising debt through bonds, Apple can pay for its U.S. operations at a much lower rate, especially given its Aa1/AA+ bond credit rating.

Update: Apple has filed a final pricing term sheet with the U.S. SEC confirming its nine-part $12 billion bond sale.

Tags: bonds, SEC

Top Rated Comments

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59 months ago

a desperate try to stabilize the shares in a rather money-burning action…. instead of caring about customers needs… or care about the horrible working conditions in China...

Apple is at the top of the list of the most active companies assuring worker conditions and rights. Most companies who do work in China are low profile enough that they don't even need to make a report. Why single out Apple? What about any other electronics manufacturer, consumer electronics, home appliance, clothing, children's toys, steel manufacturing, etc. The problem isn't Apple, it's China. China's elite would rather pump their egos up on the death of their own people's children then ever consider real laws and guidelines for worker safety. So seriously stop the BS. Apple is literally doing everything it can, which can not be said for some others whose products you are probably wearing or looking at or touching at this very moment.
Score: 10 Votes (Like | Disagree)
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59 months ago
I thought to payoff Kanye's debt. ROFL!
Score: 7 Votes (Like | Disagree)
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59 months ago
That's a good move by Apple considering its position especially with that credit rating and (hopefully) more innovation boost. Much better than bringing money back to the US with that sort of taxation.
Score: 6 Votes (Like | Disagree)
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59 months ago
What a dumb way to spend that money. If Cook is so worried about the share prices, he can hire more people to fix software bugs, put more GBs of storage and ram in all of its hardware, add a couple millimeters to substantially increase battery life of all of its hardware, and I'm sure more people will buy Apple goods and share prices will naturally increase as well. They can buy companies like Adobe and Nintendo for what they spend on buybacks yearly. I buy Apple products, but I know they are far from perfect and Android and Windows just plain suck, so I don't have much of a choice. Watching where the profits go is a bit disturbing to be honest.
Score: 5 Votes (Like | Disagree)
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59 months ago
They bought shares at $140.
They bought shares at $110.
They bought shares at $95

Four observations.
1. Great example of dollar cost averaging. If the stock goes up to $200 they're geniuses.
2. Think of all the hardware and software they could have upgraded and/or fixed with all that money.
3. Never try to catch a falling knife. It looks like they're failing terribly at propping the stock price up.
4. Tim, Eddy and Jony need to be sacked.
Score: 3 Votes (Like | Disagree)
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59 months ago

Not really. If you look into why, ultimately, that stocks have value, it's because eventually it is expected that they will pay dividends or will be repurchased by the company. This is the underpinning that makes stocks something more than just the Greater Fool Theory.

Honestly, I'd be very happy if Apple went private like Dell did recently, but I somehow doubt it can happen with a company of Apple's size.

Why do I care? Because most of the problems people complain about are caused by Tim Cook being a miser, and he does it to please Wall Street.
Score: 2 Votes (Like | Disagree)

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