Apple Sells $14 Billion in Bonds to Take Advantage of Low Interest Rates
After years of hoarding cash, Apple has sold $14 billion in bonds to take advantage of cheap borrowing costs in order to return more cash to shareholders, according to a report by Bloomberg.
The company issued debt in six parts. The longest portion of the offering, a 40-year security, will yield 95 basis points above Treasuries, after initially discussing between 115 and 120 basis points, according to a person with knowledge of the matter, who asked not to be identified as the details are private.
The report notes that until last year, Apple hadn't borrowed in the U.S. investment-grade market more than once in a calendar year since 2017, but low interest rates were too tempting for the company in its pursuit of aggressive share buybacks and dividends. Apple may also use it in funding for working capital, capital expenditures, acquisition and repayment of debt, according to Bloomberg's source.
Apple is believed to be sitting on $196 billion of cash, but has been working to reduce its net cash position, largely through payouts to stockholders. The company recently reported on earnings on the last quarter in which revenue topped $100 billion for the first time.