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(Bloomberg) – Apple Inc., one of the world's richest cash companies, is still looking for some of the ultra-cheap money to earn on the bond market.
With investment grade bond yields at unprecedented levels, it's tempting, even for Apple (with more than $ 200 billion in cash and securities) to see what investors will lend to it. It turns out that this figure is $ 7 billion, or just over 3% of its current coffers.
With 30 years of cash at record lows, many companies have been able to borrow much less for much longer. Apple will pay about 2.99% interest on its new 30-year bonds, against 3.45% for three-year bonds sold in 2015. An issue of $ 1.5 billion equates to a savings of nearly $ 7 million a year, or more than $ 200 million over three decades.
The sale of today's debt could help Apple refinance about $ 2 billion in debt due this year, in addition to much of the $ 10 billion by 2020, according to the data compiled by Bloomberg. At least one measure is profitable for the shareholders of the company: the company's return, which measures the company's income relative to its share price, is about 5.6%, whereas it can borrow for less than 3% over 30 years. .
Apple is not alone in seizing this golden opportunity. A record number of 21 leading US companies took over the market on Tuesday, borrowing a total of $ 27 billion. With more than a dozen deals in preparation on Wednesday, this week's broadcasts should already reach $ 54 billion, far exceeding the $ 40 billion estimated by dealers.
(Updates with earnings performance in paragraph four.)
– With the help of Luke Kawa.
To contact the reporter about this story: Molly Smith in New York at [email protected]
To contact the makers of this story: Nikolaj Gammeltoft at [email protected], Allan Lopez, Dan Wilchins
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