Apple’s second major bond sale, designed to raise cash for the stock buybacks Tim Cook promised in the company’s latest earnings call, was more than three times over-subscribed, reports the WSJ.
This followed a $17B bond sale almost a year ago, which set a new record for corporate debt. In both cases, Apple only had to offer interest rates marginally higher than Treasury bonds, which are considered the safest form of investment.
Apple sold $12 billion of debt of varying maturities at interest rates that were mostly less than a percentage point above comparable U.S. Treasury debt, highlighting widespread faith in the iPhone maker’s prospects. Investors flocked to the offering, placing more than $40 billion in orders.
Although it may seem odd for a company as cash-rich as Apple to need to borrow money, the position arises because the majority of the $150B cash Apple owns is held overseas. If Apple were to repatriate the cash, it would be taxed at a rate far higher than the interest rate it has to pay on the bonds.
