Apple today has started offering another round of bonds to help pay for shareholder dividends and its stock buyback program. The latest offering will be for a total of $5 billion.
Bloomberg reports that Apple’s latest $5 billion worth of bonds will be offered in four parts. A source close to the matter suggested the 30-year security portion of the bond may offer a ROI just a bit above Treasuries.
The longest portion of the sale, a 30-year security, may yield 1.1 percentage points above Treasuries, down from initial talk of around 1.25 percentage points, said the person, who asked not to be identified because the deal is private.
In its Q3 earnings call last month, Apple announced a $0.63 per share dividend. As of now, the company is about 75% through a $300 billion return program that will be complete by March 2019. Today’s $5 billion debt offering is Apple’s seventh bond issuance this year.
Bloomberg notes that 94% of Apple’s cash reserve pile of $261.5 billion sits outside the United States at this point. It’s much more cost effective for Apple to sell debt than to pay the hefty taxes that would come along with repatriating its overseas cash.
While there has been a lot of talk that President Trump will offer a tax holiday to incentivize Apple and other companies to bring cash stateside, nothing concrete has developed yet. However, analysts have already projected what such a program could do for Apple, suggesting a possible 16% growth in profits.