Apple may be gearing up for first corporate bond sale since 2023

AppleInsider

Apple is allegedly preparing to sell corporate bonds, in a sale that could raise billions in cash and finance a $100 billion share buyback plan.

Apple Park

The sale of corporate bonds can be a way for a large company to quickly raise cash. On Monday, it seems that the iPhone maker is planning to do just that.

According to a person familiar with the plans speaking to Bloomberg, Apple is preparing to make a sale of "Investment-grade bonds" later in the day. This would mark the first time of Apple selling corporate bonds since 2023.

The terms of the deal apparently take the form of Apple selling bet in up to four parts. While details of the terms are unknown, the longest portion is said to be a ten-year note, offered at a rate approximately 0.7% above treasuries.

Barclays, Bank of America, Goldman Sachs, and JPMorgan Chase & Co are said to be managing the bond sale.

The amount Apple expects to sell is also unknown, however bankers are expecting to see $35 billion to $40 billion in newly issued bonds on the market as a whole. Tech firms are anticipated to make up the bulk of that quantity.

Debt sale for cash

A company can sell corporate bonds as a way to raise funds, by selling debt securities to other entities. Apple would get funds so it can make payments for various business needs, and in exchange, the buyer of the bonds would get their money back as well as interest payments.

For investors, an "Investment-grade" bond from a company like Apple is viewed as an investment with a reliable and predictable rate of return. It's not quite as reliable as a government bond, but for entitles such as Apple, it's pretty close.

To Apple, the sale of debt to investors is an efficient and predictable way of raising cash, often better than getting a loan from a bank or financial institution. It's also cheaper than issuing stock, while also not diluting any existing ownership stakes.

It is unclear exactly why Apple wants to sell bonds and raise cash, especially since its Q2 2025 results revealed it had $28 billion in "cash and cash equivalents," along with other assets.

A good candidate for the raised funds is to help pay for a share buyback scheme, also announced during the Q2 results. The board of directors authorized a new program to repurchase up to $100 billion in Apple's common stock.



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nubus

AppleInsider said:

It is unclear exactly why Apple wants to sell bonds and raise cash, especially since its Q2 2025 results revealed it had $28 billion in "cash and cash equivalents," along with other assets. 

Apple must borrow in the US as profits are cash is kept offshore to avoid contributing to the US. It has caused a significant financial leverage and it makes borrowing more expensive for Apple. The alternative would be to pay taxes in the US.

danox

I hope they don’t do it, but that means they will, just another popular financial sleight-of-hand move used by the upper crust of society. I hate stock buybacks I wish they were illegal again like they were after the 1929 crash for very good reasons. Bank Deregulation in the 1980s is also a part of the decline of America in recent times. Ties in nicely with what’s happening in Washington DC currently…..

https://hbr.org/2020/01/why-stock-buybacks-are-dangerous-for-the-economy

https://casten.house.gov/media/in-the-news/theres-a-reason-why-stock-buybacks-used-to-be-illegal

https://en.wikipedia.org/wiki/Gordon_Gekko

edited May 5

davidw

nubus said:

AppleInsider said:

It is unclear exactly why Apple wants to sell bonds and raise cash, especially since its Q2 2025 results revealed it had $28 billion in "cash and cash equivalents," along with other assets. 

Apple must borrow in the US as profits are cash is kept offshore to avoid contributing to the US. It has caused a significant financial leverage and it makes borrowing more expensive for Apple. The alternative would be to pay taxes in the US.

You are so ill informed. All profits made in the US is taxed in the US. They can not be legally moved off shore to avoid US taxes. IRS would not allow that. For Apple, the US is one of their most profitable market.

What profits don't get taxed (in the US) are the profits made overseas. But only if those profits remains in overseas accounts. They are only taxed if they are brought into the US. But there is a tax credit for the taxes that were paid overseas, on those profits. When the US corporate tax rate was 35%, it was never a wise move for international companies to bring their overseas profit to spend in the US. This because the average overseas corporate tax is in the mid 20%. So overseas profits brought into the US would incur another 10% in US corporate taxes. But Trump in 2017, lowered the US corporate tax rate to 21%. So any oversea profits that were already taxed 25% in the foreign country it was made, can be brought into the US without incurring any more US corporate taxes. (State taxes is another matter.)

In fact, many countries do not tax foreign profits at all, when they are brought back into their countries. The thinking being that it's better for their economy, if those foreign profits were spent in their country. And taxing them would discourage companies from spending foreign profits in their own country. But if you were the foreign country like France or Spain or Germany or the UK, etc., wouldn't you want those overseas profits that were made in your country, to be spent in your country? This is why international companies like Apple, park their overseas profits in overseas accounts. Why should they pay US corporate taxes on oversea profits that they might need to spend overseas? Opening a Apple Store in any foreign country is not cheap and any foreign country would want Apple to open an Apple Store in their country. 

The US taxing foreign corporate profits goes back to the days when there were only few international companies. The US felt that those US international companies would have an unfair advantage, if they were to use foreign profits that were taxed at a much lower than the 35% US corporate tax rate, to compete with US companies that do not have any foreign profits. Thus all profits spent in the US, must be taxed at the US corporate tax rate (with credit give for any foreign taxes paid on those profits), to level the playing field in the US. Of course, now of days, with the internet, it's relatively easy for any companies to have a foreign presence. A developer with an app in the Apple App Store, is an "international company". At one time, before 2017, the US had the highest corporate tax rate at 35%.

You are making it sound like Apple is avoiding US taxes by moving US profits overseas. Thus the only reason why they need to borrow money or issue bonds to acquire spending money.  Borrowing money makes sense if its cheap enough. The cash Apple have on hand is earning interest that helps offset the cost of borrowing money or issuing bonds. I remember a time when Apple dividend amounted to about 2% of share price (before the 4:1 split in 2020) and interest rate on taking out a corporate loans was about 2%. Every share bought back saved Apple 2% from not having to pay the dividend. Thus it was a no-brainer to take out a loan to buyback shares and keeping their cash on-hand in interest bearing accounts.

edited May 5

nubus

davidw said:

nubus said:

AppleInsider said:

It is unclear exactly why Apple wants to sell bonds and raise cash, especially since its Q2 2025 results revealed it had $28 billion in "cash and cash equivalents," along with other assets. 

Apple must borrow in the US as profits are cash is kept offshore to avoid contributing to the US. It has caused a significant financial leverage and it makes borrowing more expensive for Apple. The alternative would be to pay taxes in the US.

You are so ill informed. All profits made in the US is taxed in the US. They can not be legally moved off shore to avoid US taxes. IRS would not allow that. For Apple, the US is one of their most profitable market.

What profits don't get taxed (in the US) are the profits made overseas. But only if those profits remains in overseas accounts. 

Ill informed? Most profits are made overseas. Combined with an aversion against paying taxes we have a company with a lot of funds placed where they are not needed. And so Apple keep borrowing in the US to avoid being taxed.

carnegie

nubus said:

AppleInsider said:

It is unclear exactly why Apple wants to sell bonds and raise cash, especially since its Q2 2025 results revealed it had $28 billion in "cash and cash equivalents," along with other assets. 

Apple must borrow in the US as profits are cash is kept offshore to avoid contributing to the US. It has caused a significant financial leverage and it makes borrowing more expensive for Apple. The alternative would be to pay taxes in the US.

That's no longer how it works. Under the Tax Cuts and Jobs Act (2017) as-yet undistributed foreign earnings were deemed repatriated and potentially subject to U.S. taxation regardless of whether they were actually distributed to the U.S. parent company. Going forward such foreign earnings would generally no longer be taxed by the U.S. when they were distributed to the U.S. parent company (i.e. repatriated). In some circumstances a couple of new taxes, GILTI and BEATS, might apply. But those apply regardless of repatriation.

So the concept of repatriation no longer has the tax significance it used to. Indeed, if you read Apple's SEC filings you'll see that it no longer reports the amount of cash, cash equivalents and marketable securities held by foreign subsidiaries which would be subject to U.S. taxation if repatriated. It stopped reporting those numbers after the TCJA came into effect. It largely stopped mattering whether those funds were distributed to U.S. Apple.