Apple Set to Raise Up to $4 Billion in Asia-Pacific From Bond Sales [Updated]

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Apple-BondsApple is set to issue bonds in Taiwan with the aim of raising $1 billion, according to Reuters.

The news signals the company's first attempt to sell bonds on the island where many of its supply chain partners operate, such as iPhone manufacturer Foxconn, contract chipmaker TSM, and camera lens producer Largan Precision.

The move would place Apple alongside a number of big global names that have already sold billions of dollars on Taiwan's debt market. In December, for example, Intel sold $915 million of 30-year bonds with yields of 4.7 percent. Sales of bonds by global brewer Anheuser Busch InBev with the same maturity shortly followed to the tune of $1.47 billion, yielding 4.9 percent for the company.

"Taiwan insurance companies don't have enough good (quality) fixed-income investment targets," an unnamed securities house official told Reuters. "But their funds continue to grow because in this low rate macro-environment, consumers prefer to buy financial products offered by insurance companies rather than park money in a bank deposit."

Apple appears ready to take advantage of the current liquidity of Taiwan's flush bond market, where long-term buyers of debt continue to seek creditworthy names in a race for higher yields. Cash-rich investors have reportedly made the island a haven for debt financing, and Apple's planned entrance into the market is likely to help the company secure solid partnership with its suppliers.

The U.S. dollar bonds will have a tenor of 30 years and be redeemable after the second year, sources told Reuters. Apple declined to comment, while the OTC exchange said it wasn't aware of any plan by Apple to issue bonds. However, bond issuers only need three days or less to notify the exchange before being listed.

Update: Apple will also be issuing bonds in Australia, and possibly Japan and Singapore, as part of broader plans to raise up to $4 billion in debt in the Asia-Pacific region.

Tag: Taiwan

Top Rated Comments

autrefois Avatar
59 months ago
Finding a new place to issue bonds. Phil Schiller was right, innovation is still alive and well at Apple.

It's also interesting to see just how much the Apple logo has evolved over the years to represent the styles of the times and the values of the company.



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Score: 4 Votes (Like | Disagree)
HobeSoundDarryl Avatar
59 months ago

According to the aricle, Apple is not investing in the bond market. They are issuing bonds. Big difference.

I’m not sure why they’re doing this though. (I’m not an expert on bonds). Other than raising capital, what reason would a company issue bonds?

Guess: they need more cash there and there are not enough sales there to fund expansion or other business out of cash flow. Moving cash from some other country to there might have some kind of tax and the ability to pay what needs to be paid in some other country where cash is piled up may not be feasible (and or minimize taxes). So they do this, raise a billion dollars locally for basically handing out some pieces of paper and use the billion to fund operations there.

Or maybe someone in power there requires Apple to do some debt-based business with their cousin to be granted some special favor.

Or worse.

Apparently Apple does have a pile of cash. But they are also taking on debt at various places around the world. Why? And how does one reconcile that? It's probably something like I just described- taxes, local "you scratch my back..." politics or similar. In a perfect world, money piled up anywhere could be used anywhere else without a bunch of hands behind the scenes doing a shake-down. In this world though, the back-room wheeling & dealing thrives (as does the bankers pressing everyone and every kind of entity to take on debt)... so seemingly illogical actually makes the most sense when you can see all of the details.
Score: 2 Votes (Like | Disagree)
BruceEBonus Avatar
59 months ago
Have Apple not heard of lottery scratch cards? They could have invested the same money in those instead? OK they're a helluva high risk but the profits come fast! :D
Score: 1 Votes (Like | Disagree)
Rocketman Avatar
59 months ago
If it is oversubscribed by more than 4x, maybe they will issue $2B and at a lower rate than 4.7%. 2 year callable is quite interesting. They seem to be anticipating a substantial change in US tax law.

cite:
linky 2
Score: 1 Votes (Like | Disagree)
Bonte Avatar
59 months ago

You can't just move cash. You can pay debt easily. This is tax avoidance. Smart.

Apparently there is no US tax if Apple imports the cash to pay off debt, Taiwan could have a similar law. Indeed a smart move.

https://next.ft.com/content/b1f867a4-b703-11e2-a249-00144feabdc0
Score: 1 Votes (Like | Disagree)

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