The world’s largest technology company, Apple Inc, is believed to be considering a debt issue in the Australian market. The company will be making a series of investor calls to update them on a potential bond issue. Deutsche, Goldman Sachs and Commonwealth Bank are said to have been appointed to arrange a potential issue.
Apple has a huge amount of cash – in excess of US$200bn – sitting offshore. If it repatriates this money into the US it must pay US taxes at a rate of 35%. By leaving the money offshore, it can take its time to decide how best to use the cash and ultimately minimise its corporate taxes.
Previously the company has issued bonds to fund dividends and share buy-backs. The interest on the bonds is tax deductable making the process extremely tax-efficient. Bonds have previously been issued in yen, swiss francs and euro. An Australian dollar bond issue would be a strong endorsement of the local bond market that also recently saw SAB Miller issue $700m worth of bonds to fund its Foster’s operation in Australia.
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