Apple is sitting on more cash than King Midas could dream of, but instead of bringing that money back to the U.S. to fund stock buybacks, Apple is reportedly looking to exploit Switzerland’s low interest rates with a Swiss Franc bond sale.
Goldman Sachs and Credit Suisse have been hired to manage the potential sale, reports the Wall Street Journal, which says the new bond sale could come as soon as Tuesday.
Investors like Apple are now willing to pay to lend Swiss cash for up to 10 years, after the soaring demand for Swiss franc-denominated debt has sent the government-bond yields into negative territory. The negative yields will allow Apple to borrow money so cheaply it makes more sense for the company to go into billions of dollars of debt rather than try to repatriate its cash back into the U.S.
The value of the Swiss franc has risen sharply over the last month ever since the Swiss central bank removed a cap that set a limit on the strength of the franc against the euro.
Apple just sold $6.5 billion of bonds last week to fund buybacks and dividend payments. The maturity of Apple’s bond sale hasn’t been decided yet. According to investors, the company may consider a 10-year or 15-year bond, which would set the yield lower than 0.5 percentage points.
Source: WSJ
