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  • Apple Set to Issue Bonds in Euros Due to Low Interest Rates


    According to The Wall Street Journal, Apple is set to borrow cash in euros for the first time in company history. The move is reportedly to take advantage of record-low interest rates in Europe with what will be some of the lowest-ever interest rates for a corporation. The Cupertino California company is planning to issue two sets of euro debt which will mature in 8 and 12 years. The bonds will help the company raise $3.5 billion US or 2.8 billion euros. The company plans to use this money to help finance share buybacks and dividends.

    The eight-year notes are currently expected to have a yield of about 1.1% while the twelve-year notes will offer a 1.7% yield. As mentioned before, the bonds will have the lowest yield rates that have ever been paid for such euro-denominated corporate maturities. As of right now they are even lower than the rates Spain and Italy pay for similar maturity debt.

    For those of you who didnít know, borrowing costs in Europe are exceptionally low as of right now because the continentís central bank has deflated interest rates in an effort to boost the local economy. The Cupertino California company recently held a call with investors to discuss bonds which represent the first time ever the company will offer bonds in euros. Most of the companyís large amount of money is held overseas and repatriating it to buy back shares or issue dividends would cost the company a significant amount in US taxes. To help ease the financial burden, Apple has decided to borrow coupled with using domestic cash, to help fund its capital return program.

    Just last quarter, Apple had $155.2 billion in cash and marketable securities. The company has mentioned multiple times that it doesnít plan to bring the money back to the US due to high tax rates.

    Source: The Wall Street Journal via AppleInsider
    This article was originally published in forum thread: Apple Set to Issue Bonds in Euros Due to Low Interest Rates started by Akshay Masand View original post