Apple-BondsApple has raised $7 billion in debt through a five-part bond sale of both fixed and floating rate notes, according to the company's final pricing term sheet filed with the U.S. Securities and Exchange Commission on Friday.

The five-part sale includes:

  • $350 million maturing in 2019 with a floating interest rate based on three month LIBOR plus 14 basis points

  • $1.15 billion maturing in 2019 with a fixed 1.1% interest rate

  • $1.25 billion maturing in 2021 with a fixed 1.55% interest rate

  • $2.25 billion maturing in 2026 with a fixed 2.45% interest rate

  • $2 billion maturing in 2046 with a fixed 3.85% interest rate

The transaction was underwritten by Goldman Sachs, J.P. Morgan Securities, MLPF&S, and Deutsche Bank Securities, among others.

Apple held $231.5 billion in cash and marketable securities, partially offset by $68.9 billion in long-term debt, as of the fiscal third quarter, 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, particularly given its low-risk Aa1/AA+ bond credit rating.

Apple typically uses the capital raised to fund dividend payments to shareholders and its share buyback program, which the company expanded to $175 billion in April. At the time, Apple said it expects to spend over $250 billion in cash under its capital return program by the end of March 2018. It also uses the capital for general corporate purposes, such as the repayment of earlier debt and acquisitions.

Tags: Bonds, SEC

Top Rated Comments

neuropsychguy Avatar
107 months ago
The wonders of capitalism. Cheaper to borrow money than spend your own savings.
That isn't because of capitalism (only). It's an issue of much of Apple's cash being "stuck" outside the U.S. because of less than ideal U.S. tax laws. Corporate taxes, some people argue, are the opposite of capitalism (or at least interfere with capitalism). A common definition of capitalism is: "an economic and political system in which a country's trade and industry are controlled by private owners for profit, rather than by the state". With that in mind, one can argue that it's cheaper for Apple to borrow money because of statist/socialist/communist economic policies instituted by the federal government. A purely capitalistic society would have no business taxes. It would then be cheaper for Apple to bring the money back to the U.S. rather than borrow.

Anyway, that's enough politico-economic discussion from me today.
Score: 6 Votes (Like | Disagree)
CFreymarc Avatar
107 months ago
The wonders of capitalism. Cheaper to borrow money than spend your own savings.
When we stop punishing the productive by higher tax rates, the this craziness will stop.
Score: 5 Votes (Like | Disagree)
GadgetSN Avatar
107 months ago
The wonders of capitalism. Cheaper to borrow money than spend your own savings.
Score: 3 Votes (Like | Disagree)
Rocketman Avatar
107 months ago
People often complain about Apple using different jusrisdictions to reduce tax owed. Apple operates in a whole bunch of countries. Some for manufacturing employment, some for retail, some for distribution, and some for IP. Perfectly normal activity. The complainers are wrong, but . . .

The complainers want to bring it back for the purpose of taxing it. The current capital gains tax here is 23.8%. The income tax around 45% including state and federal, and "Obamacare" add-ons. They want more tax, not more investment. Where it is now, it is providing more investment with minimal taxation. In order to use it in the USA where they want they have been taking out massive loans, about $70B against those assets in various currencies, to invest the loan proceeds in the USA which is legal without taxation. The cost of course is the massive interest they pay on an absolute basis, if not a relative basis. That is a cost.

The good news from all this is Apple has learned to bypass wacky US Federal tax laws to be able to invest MORE in the USA than they otherwise could.

New balance: $75.9B

About 1/6 short term, 1/6 5 year, 1/3 10 year and 1/3 30 year overall. So it will roll off over the next several years to a notable degree. The return on average assets is currently 10.24%, so the payment is fully covered by growth.

Time for more GBP bonds.
Score: 2 Votes (Like | Disagree)
ArtOfWarfare Avatar
107 months ago
I see the year 2046 in this article... doesn't that make the assumption that Apple will still be around in 2046?

2019 and 2021 seem like safe guesses that Apple won't vanish before then. 2026 doesn't seem unreasonable... although 10 years is a long time in tech. 2046? That gives us enough time that a company that hasn't even formed yet somehow undoes Apple.

By 2046, the singularity may have occurred already.
Score: 2 Votes (Like | Disagree)
Reader999 Avatar
107 months ago
I'm not a financial expert but it seems like Apple's stock is very undervalued. They're basically putting billions back into the stock in buy-backs and dividends and stock is trading very low as a part of EPS compared to other tech companies. It's like wall street is constantly in this mode of "apple is 6 weeks away from dying" and afraid to go in big. the stock split didn't help, ASP of the iPad and iPhone didn't help, buy backs aren't helping, dividends might be helping but not in a huge way.

Where is the pro-AAPL discussion? Or is them taking on massive debt despite their overseas holdings causing more problems for them in stock price because investors see the bonds as a liability?
From the corporate finance perspective, raising debt gives positive signaling than raising capital through equity. Raising debt is a good thing for Apple if they can keep up its growth (assuming Apple Car). This will increase its financial leverage and tax shield. It is cheaper to borrow debts than issue more equities because debts - bonds only require a marginal premium above TBill due to its AA rating, but equity holder will require much more return to their cash than bonds holders.
Score: 1 Votes (Like | Disagree)

Popular Stories

ipad mini 2021 youtube

New Report Reveals When to Expect the iPad Mini 7

Tuesday October 1, 2024 2:09 pm PDT by
Apple is working on a new iPad mini that will "potentially" be released "by the end of 2024," according to a report today from Bloomberg's Mark Gurman. Last month, Gurman reported that Apple had "new iPads in the works," including an upgraded version of the iPad mini. At the time, he said the device was "on deck for Apple's October event" alongside the first M4 Macs. The wording in his...
Generic iOS 18

Apple Releases iOS 18.0.1 With Touch Screen Bug Fix and More

Thursday October 3, 2024 2:22 pm PDT by
Apple today released iOS 18.0.1 and iPadOS 18.0.1, the first updates to the iOS 18 and iPadOS 18 operating systems that debuted earlier in September. iOS 18.0.1 and iPadOS 18.0.1 come two weeks after the launch of iOS 18. The new software can be downloaded on eligible iPhones and iPads over-the-air by going to Settings > General > Software Update. According to Apple's release notes, the...
apple silicon mac lineup wwdc 2022 feature purple

MacBook Pro, iMac, and Redesigned Mac Mini With M4 Chips on Track to Launch 'This Year'

Tuesday October 1, 2024 1:57 pm PDT by
Apple plans to release new MacBook Pro, iMac, and Mac mini models with the M4 series of chips "this year," according to Bloomberg's Mark Gurman. Gurman initially said these Macs would likely be announced during a virtual event this October, but he has been more vague about the timing lately, with wording such as "in the coming weeks" and now merely "this year." In any case, it is clear that...
15 New Things Your iPhone Can Do in iOS 18

15 New Things Your iPhone Can Do in iOS 18.1

Friday September 27, 2024 6:14 am PDT by
Apple is set to release iOS 18.1 in October, bringing the first set of Apple Intelligence features to iPhone 15 Pro and iPhone 16 models. This update marks a significant step forward in Apple's AI integration, offering a new Siri contextually-aware experience and a range of additional capabilities powered by on-device machine learning and large language models. There are a couple of handy new...
macOS Sequoia Night Feature

Apple Releases macOS Sequoia 15.0.1 With Bug Fixes

Thursday October 3, 2024 2:27 pm PDT by
Apple today released macOS Sequoia 15.0.1, the first update for the macOS Sequoia operating system. The 15.0.1 update comes a week after Apple first released macOS Sequoia 15. Mac users can download the ‌macOS Sequoia‌ update by using the Software Update section of System Settings. According to Apple's release notes, macOS Sequoia 15.0.1 fixes a bug that could cause the Messages app...
airpods pro 2 gradient

AirPods Pro 3 Expected Next Year: Here's What We Know

Tuesday October 1, 2024 5:47 am PDT by
Despite being released over two years ago, Apple's AirPods Pro 2 continue to dominate the wireless earbud market. However, with the AirPods Pro 3 expected to launch sometime in 2025, anyone thinking of buying Apple's premium earbuds may be wondering if the next generation is worth holding out for. Apart from their audio and noise-canceling performance, which are generally regarded as...
Generic iOS 18

iOS 18.0.1 Coming Soon: What to Expect for Your iPhone

Wednesday October 2, 2024 5:50 am PDT by
Following the release of iOS 18 for the iPhone last month, Apple is preparing to release iOS 18.0.1 with bug fixes in the near future. We previously reported that Apple has been internally testing iOS 18.0.1, and today a private account on X with a proven track record of sharing iOS-related information said the update will have a build number of 22A3370. We expect iOS 18.0.1 to be a minor ...
Apple Logo

Apple in October: Six New Things to Expect This Month

Tuesday October 1, 2024 11:47 am PDT by
The calendar has turned to October, and it should be another busy month for Apple. Apple is likely to hold another event this month to announce new Macs and iPads, and there are also a couple of iOS 18 updates that are expected to be released soon. Below, we outline six new things to expect from Apple this month. MacBook Pro Apple plans to announce updated 14-inch and 16-inch...
macOS Sequoia Feature

Here Are All the New Features Coming to macOS Sequoia This Month

Thursday October 3, 2024 6:27 am PDT by
‌Apple in October will release macOS Sequoia‌ 15.1, bringing to Macs the first Apple Intelligence features such as Writing Tools, new Siri features, Smart Replies, and more. In addition, macOS 15.1 adds a handful of welcome tweaks and improvements to existing Mac capabilities. Here's what we can expect from the first major update to macOS Sequoia later this month. Note that Apple...