Despite having a mountain of cash overseas, Apple has decided it’d be cheaper for the company to go into debt for its stock buyback program, rather than bring the money back to the U.S. to be taxed.
After taking the initial steps yesterday toward offering bonds to investors, Apple opened up its order book today and plans to sell $17 billion worth of bonds. The six-part all dollar offering has already attracted more than $50 billion of orders within the first few hours, in what has become the largest non-bank bond deal in history.
According to a report from Reuters, Apple is offering $17 billion worth of bonds in the following six bond types to investors:
- $1 billion, floating rate, three year maturity
- $1.5 billion, fixed-rate, three year maturity
- $2 billion, floating-rate, five year maturity
- $5.5 billion fixed rate, ten year maturity
- $4 billion fixed rate, five year maturity
- $3 billion fixed rate, thirty year maturity
Even though Apple has a whopping $145 billion in cash, only $45 billion of it is located in the United States. Apple plans to pay $100 billion back to investors by 2015, so in order to raise the extra $60 billion worth of cash it will need for the next three years, Apple’s selling the bonds.
Apple hopes that the move to return more cash to investors will help its sliding stock price. AAPL shares peaked at $700 per share last year, but the stock price has dropped all the way below $400 in recent weeks. Tim Cook has remarked that the slipping stock price has been “frustrating” but things appear to have settled over the last 10 days as the stock has rallied more than 12 percent.