During its last earnings call, Apple announced that it is expanding its capital return program by 50%, the company will be repurchasing over $140 billion of shares, as well as paying a bigger dividend to its shareholders.
To fund this activity however, it is cheaper for the company to sell domestic company debt than repatriate its ever-increasing cash hoard that is ‘trapped’ overseas. Therefore, Apple has today announced it will issue a new 7-part bond to raise the funds.
Apple’s excellent credit rating, better than many countries, means it can offer bonds at relatively cheap rates, costing the company significantly less than if it repatriated funds from its overseas caches, which it would be required to pay U.S. taxes on.
JP Morgan, Bank of America, Merrill Lynch and Goldman Sachs will join to manage the 7-part bond. Exact rates and maturities for the bonds will be disclosed later today.