Wall Street is lining up to stuff its pockets with cash from Apple’s money printing empire, but rather than dipping into its massive offshore cash pile to pay for its expanded buyback program, Apple is once again planning to raise an enormous amount of debt to pay off investors.
Apple’s impending $17 billion bond sale could rank as the second largest ever of its kind, according to the Financial Times and comes only a year after it set the record with similar bond deal in May 2013.
By going into to debt Apple can avoid heavy tax fees for bringing its cash back to the U.S. Last year the move saved the company a $9.2 billion tax bill thanks to low-interest rates that make it cheaper for Apple to borrow instead of spending its bring its own money back to the U.S.
Apple’s domestic cash-pile currently boasts $20 billion and could foot the buyback bill, but Apple’s new CFO Luca Maestri indicated on last week’s earning call that the company would rather keep that nest egg intact to have more liquidity for acquisitions and other investments in the U.S.
The lack of domestic cash in Apple’s accounts has made it difficult to pay back vocal investors like Carl Icahn, but thanks to low-interest rates Apple can dodge the 35% tax to return its offshore funds, allowing Tim Cook and co to keep its cake and let investors eat it too.
Source: Financial Times