Why Ap­ple is sell­ing bil­lions in debt again

Financial Mirror (Cyprus) - - FRONT PAGE -

Ap­ple Inc. (NAS­DAQ: AAPL) is not a com­pany that is ex­actly hurt­ing for cash th­ese days. Af­ter all, it just in­di­cated that its lat­est cash bal­ance was roughly $178 bln, if you in­clude its short-term and long-term in­vest­ments. So why is Ap­ple rais­ing an­other $5 bln or so in an­other bond of­fer­ing?

Ap­ple has filed to sell a multi-tranche of­fer­ing of notes and bonds, and the re­ported amount is $5 bln. This would be smaller than the $12 bln it raised in 2014 and the $17 bln in 2013.

If you go back to Ap­ple’s earn­ings re­lease anal­y­sis, it showed that in­ter­na­tional sales were 65% of rev­enues. This means that much of Ap­ple’s cash trea­sure trove is stored out­side of the United States. Ap­ple would have to pay a huge penalty to bring that money back into the coun­try.

Stan­dard & Poor’s al­ready said on Mon­day that Ap­ple’s se­nior un­se­cured notes will be rated AA+. The prospec­tus and the S&P show the ma­tu­rity dates as 2020, 2022, 2025 and in 2045.

The notes and bonds have been ear­marked for gen­eral cor­po­rate pur­poses. Of course that in­cludes stock buy­backs and div­i­dends, as well as fund­ing for work­ing cap­i­tal, cap­i­tal ex­pen­di­tures and ac­qui­si­tions, and re­pay­ment of debt. Gold­man Sachs and Deutsche Bank were the only two listed un­der­writ­ers for the note and bond of­fer­ing.

Ap­ple shares were up 0.5% at $117.75 in mid­day trad­ing on Mon­day. Its 52-week trad­ing range is $71.33 to $120.00, and the con­sen­sus an­a­lyst price tar­get from Thom­son Reuters has now risen to $129.53.

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