Please ensure Javascript is enabled for purposes of website accessibility

Apple, Inc. to Tap Debt Markets Yet Again

By Evan Niu, CFA – Updated Nov 6, 2017 at 2:45PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The tech titan's capital return program demands it.

Like clockwork, every time Apple's (AAPL -1.96%) domestic cash position dwindles to near $15 billion, it promptly conducts a bond offering in order to fill its coffers to continue its aggressive capital return program. Just days after reporting a blockbuster fiscal fourth-quarter earnings release, the company has signaled its intention to tap the debt markets yet again.

Apple filed a preliminary prospectus this morning for the offering, which is currently expected to include six tranches. The Mac maker has not yet specified the size of the offering and the interest rates have also not been determined yet.

iPhone X

Image source: Apple.

That's a lot of paper

The notes will come due in November 2019, November 2020, January 2023, January 2025, November 2027, and November 2047. Bloomberg reports that the 2047 notes may price with a spread of around 1.125% over comparable Treasury bonds. For reference, 30-year Treasury bonds are currently yielding around 2.8%, which suggests Apple's 30-year notes may price around 3.925%. Here's how that potential rate would compare to other Apple bonds that mature after 2040.



Last Sale


May 2043




May 2044




February 2045




May 2045




February 2046




August 2046




February 2047




September 2047




Data source: FINRA Market Data/Morningstar.

Apple raised approximately $7 billion worth of debt last quarter, which included $2 billion in its first Canadian bond offering that was followed by $5 billion in September. Total term debt on Apple's balance sheet now stands at $103.7 billion, in addition to approximately $12 billion in commercial paper.

Graph showing Apple's cash and debt levels

Data source: Apple. Chart by author.

After repurchasing $7.5 billion worth of stock last quarter, which included $4.5 billion in open market purchases and a $3 billion accelerated share repurchase (ASR) program, Apple has bought back $166 billion out of its $210 billion repurchase authorization. That authorization was boosted from $175 billion to $210 billion in May alongside fiscal second-quarter earnings; Apple updates its capital return program on an annual basis around April or May of each year.

Debt and taxes

Over the past year, the chances of some type of tax reform that includes more favorable repatriation rates has increased significantly. Republicans unveiled a tax bill last week that includes a significantly lower one-time repatriation rate of 12% on all foreign cash. Being the largest hoarder of foreign cash in the world by far, Apple potentially stands to be the greatest beneficiary if the bill were to pass. The company now holds $252.3 billion (94% of total cash) overseas.

Apple has lobbied for tax reform for years, with CEO Tim Cook arguing that the current 35% repatriation rate is far too high. Cook has said that Apple would gladly bring some of that cash home for domestic investment (and capital returns) if only the repatriation rate was "reasonable." The chief executive has previously said a rate in the "single digits" would be reasonable, but more recently acknowledged that 15% to 20% may be more likely.

But Apple's capital return program can't wait on congressional action. It needs that domestic cash now.

Evan Niu, CFA owns shares of Apple. The Motley Fool owns shares of and recommends Apple. The Motley Fool has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 calls on Apple. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Apple Stock Quote
$148.11 (-1.96%) $-2.96

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 11/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.