Apple’s $17 billion bond deal

Apple Inc wowed the debt markets on Tuesday with the largest non-bank bond deal in history, offering a whopping $17 billion for sale as the U.S. computer giant switches strategy to placate restless shareholders.

Sources said investors could barely submit orders fast enough to get in on the deal from Apple, the only major tech company without a single penny of debt on its books.

No debt and they still had to placate shareholders.

  • Well, Apple theoretically has to placate somebody, if only all the hedge fund managers who see all that cash sitting around that they can’t get their hands on. There are only so many pension funds to rob, after all.



      Fed Reserve sacrificed the entire world economy in order to save the banks from themselves. Creating money out of debt is the problem so called fractional reserve banking. As soon as the bond deal was signed Goldman stopped shorting the stock and all of sudden it is up 50 points.

  • The reason this is “placating” shareholders is that this allows them to return cash to shareholders without having to repatriate their cash, which is overseas. Bringing the cash back to the US would incur a huge tax liability, borrowing the money at the rates Apple can demand is significantly less expensive.

    • Sebastian

      Precisely. The lack of debt does nothing for shareholders, especially at the borrowing rates Apple is seeing with their cash as collateral.

  • torifile

    I think you’re being overly dismissive of shareholders. I’ve been a long time AAPL shareholder and I’ve been incredibly frustated with the drop in price. I invested years ago and several times recently because it was a sound investment. The way the stock has dropped has been demoralizing to me, an average joe with enough sense to try to invest. I’m glad they are doing something to put the brakes on this drop. If they hadn’t tried, I’d be completely pissed.

    So, yes, placation is nice. It’s the only way we get paid for owning part of the company. Otherwise, we only get “paid” when we leave it. That makes no sense.

  • Maybe the hedgies think that like many other companies, once Apple gets on the debt treadmill they’ll never get back off it, and they’ll get deeper in debt, and eventually they’ll be over a barrel. Then the money whizzes can swoop in and take over.

    Good luck with that one.

  • Sebastian

    While I greatly enjoy the tech articles and commentary on websites like the Loop, Daring Fireball etc, the finance commentary here is as uninformed and superficial as the tech coverage in the mainstream that you so frequently critique (deservedly).

    The tech press’ obsession with daily AAPL stock development is not helpful, especially when it gets to the complexities of this capital management plan. I think we’d be better off if everyone stayed in their field of expertise.

    • Here’s “superficial” for you. I’ve been an Apple shareholder since 2005. I didn’t need a dividend to remain happy with how well it’s done for me, but I’m glad to have it.

      When I hear analysts and hedge fund managers complaining about how much cash Apple is holding, I know they’re not looking out for me.