Wednesday, October 26, 2016

Apple announces new relationship plan to finance amp share buybacks &; prices predicted today, returns

An SEC filing reported by ZeroHedge reveals that Apple has announced plans for a series of new bond issues to raise money for further stock buybacks and dividend payments in what could be a 10-part deal.

General corporate purposes, including repurchases of Apple’s common stock and payment of dividends under the company’s program to return capital to shareholders, funding for working capital, capital expenditures, acquisitions and repayment of debt.

MarketWatch adds that the notes will offer floating-rates maturing in 2018 and 2019, and fixed-rates maturing at a range of dates from 2018 all the way through to 2046. Apple has not yet revealed either the rates to be offered or the total sum it plans to raise, but previous issuances suggest we can expect the amount Apple is borrowing to be substantial …

Earlier U.S. bond sales raised $17B in 2013, $12B in 2014 and $8B last year. Apple advised during last month’s earnings report that it had so far executed $153B of its planned $200B stock buyback program.

For those confused about why Apple needs to borrow money when it has $200B in the bank, it’s because most of that money is held overseas, and the company would have to pay hefty taxes in order to repatriate it. It’s far cheaper for it to borrow the money, especially given that its Aa1/AA+ credit rating means that it can afford to offer very low returns.

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