Apple, Inc. issued $12 billion of dollar-denominated bonds as the iPhone maker seeking to reward shareholders locked in a cheaper alternative than overseas cash that’s subject to repatriation taxes.
The sale included $2.5 billion of 3.45 percent, 10-year notes that pay 77 basis points more than similar-maturity Treasuries, according to data compiled by Bloomberg. The spread was less than the approximately 90 basis points that was marketed earlier today, according to a person with knowledge of the transaction.
By taking on more debt, the world’s largest technology company by stock-market capitalization is sticking to its efforts to keep its U.S. tax bill low. Borrowing costs in the bond market are much lower than the levy on any money repatriated on Apple’s balance sheet that’s considered to be held overseas. Of the $151 billion Apple has in cash and marketable securities, about 88 percent is held offshore, the company said on an April 23 earnings call.
“They don’t want to pay the tax to bring it back to the U.S.,” said Matthew Duch, a fund manager at Calvert Investments in Bethesda, Maryland, which oversees more than $12 billion in assets, and was considering buying part of today’s offering. “The market is giving them very cheap money.”