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  • Apple Becoming a Big Player in the Corporate-Bond Market


    Apple appears to be among the few tech companies that has enough cash to buy up corporate debt as a way to grow their wealth without being stuck with repatriation taxes. The folks over at Bloomberg, citing sources who claim to have knowledge of the investments, reports that Apple, Oracle, Google and seven other valuable tech firms are spending a large amount of money into corporate bond offerings. With the US short-term interests rates hovering at near zero percent, debt markets seem to have become more attractive options for traditional investment managers. The same sources are stating that Apple is now one of the biggest investors of short term bonds, even buying $200 million of a $1 billion issue at times.

    As of right now, these companies have more than $500 billion in assets and are collectively giving established investment firms like Pacific Investment Management Co. (Pimco), a run for their money. According to the report, these tech firms are sometimes purchasing as much as half of a bond issuance, a percentage which makes them more competitors to investment firms that would otherwise be the very people that would be handling their money.

    When it comes to offshore holdings, Bloomberg discovered that representatives from Australia’s biggest banks are being sent to Reno, Nevada where Apple’s asset management subsidiary, Braeburn Capital, is currently located. Unsurprisingly, Oracle is also known to field cash managers in that city as well. These firms have reportedly channeled several investments toward financial entities and well-rated companies such as Exxon, Merck and Walmart. Other recent buys have focused on investment-grade securities set to mature in two to three years.

    We’ll have to see how everything pans out for these companies or if the government is going to crack down further on some of these tactics going forward.

    Source: Bloomberg
    This article was originally published in forum thread: Apple Becoming a Big Player in the Corporate-Bond Market started by Akshay Masand View original post