Apple today has launched a “benchmark” sized Australian dollar corporate bond issue, its first in Australian currency. Investors in Australia were informed of the two-part bond sales just recently and told that Apple will offer four-year and seven-year bonds in the country.
Since the bond issue is referred to as benchmark-sized, Apple is likely looking to raise between $500 million and $1 billion. Seeing that Apple has a AA+ rating, lenders are aware that it’s a low credit risk investment, meaning that Apple shouldn’t have trouble raising the money and can offer bonds at a relatively cheap rate. The bond program is being managed by Goldman Sachs, Commonwealth Bank and Deutsche Bank.
The Sydney Morning Herald reports:
The pricing guidance on the four-year bonds that will be offered in both fixed and floating format is 0.70 percentage points over the bank rate, or around 3 per cent. Guidance for the seven-year bonds has been set at around 1.15 percentage points over the bank swap rate or around 3.80 per cent.
In the past, Apple has held bond sales in both Japan and the United States. Apple’s strategy for using bonds to raise funds is that it is significantly cheaper for the company to hold bond sales than is repatriating foreign funds and paying US tax on its international cash.
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Surely it will be the great opportunity for the investor in Australia.
More than happy holding the stock for over a year, enjoying capital appreciation, dividends in USD while the AUD falls. Whilst the bonds charge a premium, I would have greater confidence investing in an ibond than leaving money in a long term deposit account.
Last sentence says it all… tax evasion.