As far as I know it is legal, if it is Apple Inc (not subsidiary) to borrow money in a foreign country. Apple already did it in Europe.
It means also that Apple has to re-pay borrowed money with Apple Inc cash, not cash held in foreign country (for this reason it is legal). Probably they are still waiting for a tax holiday in next years.
Why would they unnecessarily incur such FX risk? What would be the benefit of borrowing in yen, converting to US dollars, repurchasing shares, then converting (after-tax) future dollars into yen (to repay coupon and principal on the debt over the next five years), thus exposing themselves to the possibility that the yen could appreciate over time?
Why did Apple issue these bonds? Not thinking they need the money.
I think it's just to provide a balance-sheet hedge. I.e., do a 'natural' currency hedge of their yen cash inflows by matching it with a yen liability (just as they did with SFRs a couple of months ago).
They certainly don't need the cash.
Aren't they planning to open a design office in Japan, too? It could be that they don't have a comfortable amount of yen for their plans.
Comments
As far as I know it is legal, if it is Apple Inc (not subsidiary) to borrow money in a foreign country. Apple already did it in Europe.
It means also that Apple has to re-pay borrowed money with Apple Inc cash, not cash held in foreign country (for this reason it is legal). Probably they are still waiting for a tax holiday in next years.
Why would they unnecessarily incur such FX risk? What would be the benefit of borrowing in yen, converting to US dollars, repurchasing shares, then converting (after-tax) future dollars into yen (to repay coupon and principal on the debt over the next five years), thus exposing themselves to the possibility that the yen could appreciate over time?
Aren't they planning to open a design office in Japan, too? It could be that they don't have a comfortable amount of yen for their plans.
"Bond. Yen Bond."