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First Posted: 4/30/2013
(AP) Apple Inc. began selling $17 billion in bonds on Tuesday, one of the largest corporate bond issues ever.
The company is selling the bonds in its first debt issue since the 1990s as part of an effort to raise money to give to shareholders through dividend payments and stock buybacks.
Apple has $145 billion in cash, more than enough for the $100 billion cash return program it announced last week. However, most of its money sits in overseas accounts, and the company doesn’t plan to bring it to the U.S. unless the federal corporate tax rate is lowered.
Raising the money through a corporate bond sale gives Apple a tax benefit, since interest payments on corporate debt are tax-deductible.
The $17 billion is spread across six types of bonds, including a three-year note and a 30-year bond, according to market participants.
Ratings agencies Standard & Poor’s and Moody’s last week rated Apple at one rung below their highest rating for issuers. Moody’s said only four non-financial companies have the highest rating, and Apple doesn’t deserve it because it could adopt an even more shareholder-friendly policy, and its policy of not repatriating cash could force it to borrow more.
Research firm Dealogic said the largest previous corporate bond deal was a $16.5 billion issue by Swiss drug company Roche Holdings Inc. in 2009.
Associated Press