A new report from Bloomberg today says that Apple is reducing its bond purchases ahead of bringing its overseas cash back to the US. As other tech companies are doing the same, there are concerns about how this will affect the corporate bond market.
Most of Apple’s $285 billion in cash is currently overseas, and an estimated $157 billion of it is invested in corporate bonds. Anonymous sources have told Bloomberg that Apple along with Alphabet and Oracle have been passing on bond purchases this year.
A Credit Suisse analyst expects most US companies to repatriate overseas cash or spend within the next two years. As for Apple, with its position as the largest bond purchaser, there are some concerns that the pullback could weaken the corporate bond market.
Bloomberg notes that according to some reports, tech companies’ involvement in bond purchases have been 1/6th of previous activity. There’s also concern about how all of this will influence future bond offerings, as tech companies are also the leading corporate bond issuers.
On Apple’s Q1 earnings call, we heard more details about Apple’s financial plans, including the goal to move to cash neutral, with debt and cash holdings balancing to zero.