Apple issues first Australian bond, raises more than AU$1.2B

Posted:
in AAPL Investors edited August 2015
As anticipated, Apple on Thursday local Australia time issued an Australian dollar-denominated bond that according to one report has already reached AU$1.2 billion, or about $883 million.




Apple's first Australian issuance came in the form of a two-part "benchmark" bond sale consisting of four- and seven-year notes, reports The Sydney Morning Herald.

The publication notes price guidance of the fixed and floating rate four-year bonds is pegged at around 3 percent, while the seven-year bonds are being offered at 3.80 percent, or 0.7 percent and 1.15 percent over bank rates, respectively. Apple's Australian bond is managed by Goldman Sachs, Commonwealth Bank and Deutsche Bank.

Reports earlier this week suggested Apple's debt offering would be land somewhere between AU$500 million and AU$1 billion.

Prior to today's bond sale, Apple notably sold debt in U.S. dollars and Euros, but has more recently taken an interest in low rate areas in Asia and Europe. For example, the company raised about $1 billion in a Swiss franc-denominated offering in February, $2 billion in yen-denominated bonds in June and another $2 billion in British pounds last month.

Apple is thought to be leveraging international debt to fund its domestic capital return program. The company is slated pass $200 billion back to shareholders by the end of March 2017, but is reluctant to repatriate overseas cash due to high U.S. tax rates. Of its $220 billion cash hoard, more than $190 billion is held by offshore subsidiaries.
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Comments

  • Reply 1 of 48
    So when Apple receives this overseas cash by issuing international debt, do they not need to repatriate that new cash in order to use it to buy back stock in a U.S.-based stock market? I don't know the rules of international finance.
  • Reply 2 of 48
    I really dislike the length Apple goes through to avoid paying taxes. I generally like Apple, but not when it comes to these shenanigans.
  • Reply 3 of 48
    mcarlingmcarling Posts: 1,106member
    I'm glad that Apple are not funding the evils of government more than they have to.
  • Reply 4 of 48
    bobschlobbobschlob Posts: 1,074member

    I'm sad about Apple's stock.  :(

    Can we get a nice DED piece on something? That always cheers me up.

  • Reply 5 of 48
    sflocalsflocal Posts: 4,614member
    Quote:

    Originally Posted by justbobf View Post



    I really dislike the length Apple goes through to avoid paying taxes. I generally like Apple, but not when it comes to these shenanigans.



    Apple is being smart.  It pays only taxes it is LEGALLY obligated to pay, and not because you feel Apple should just because they have the money to burn.



    You want to pay more than required, you go right ahead. 

     

  • Reply 6 of 48
    Tax avoidance might be legal, doesn't make it right.
  • Reply 7 of 48
    asciiascii Posts: 5,941member

    Is this correct? They can't repatriate their overseas profits to the US without paying tax, but if they sell bonds overseas the money they get for those can enter the US tax free. And then in 5 or 7 years when the bonds fall due, they just pay back the overseas investors with the offshore profits which stayed there all along.

  • Reply 8 of 48
    bobschlobbobschlob Posts: 1,074member
    Quote:

    Originally Posted by hentaiboy View Post



    Tax avoidance might be legal, doesn't make it right.



    If it's legal, it's not "tax avoidance". It's just "taxes". Those are the rules, and you play by them.

    Whether you like it or not is irrelevant.

  • Reply 9 of 48
    mcarlingmcarling Posts: 1,106member
    Quote:

    Originally Posted by ascii View Post

     

    Is this correct? They can't repatriate their overseas profits to the US without paying tax, but if they sell bonds overseas the money they get for those can enter the US tax free. And then in 5 or 7 years when the bonds fall due, they just pay back the overseas investors with the offshore profits which stayed there all along.




    That's essentially correct.  The term of the bonds must exceed a threshold (I think three years) or else the IRS would consider the sale and repayment of the bonds to be one transaction, which would make it a taxable repatriation.

     

    The important thing is to prevent the US government from sucking the money out of the economy and then using it to bomb children, drone strike weddings, and topple secular governments around the world.

  • Reply 10 of 48
    cnocbuicnocbui Posts: 3,613member
    Quote:
    Originally Posted by BobSchlob View Post

     



    If it's legal, it's not "tax avoidance". It's just "taxes". Those are the rules, and you play by them.

    Whether you like it or not is irrelevant.




    I'll remind you of that if Australia decides to hit Apple and others with multi billion retrospective tax bills for avoidance.  You and others on here will be screaming blue murder and calling on the US to nuke Oz, no doubt, because it's so outrageously unfair.

  • Reply 11 of 48
    hentaiboy wrote: »
    Tax avoidance might be legal, doesn't make it right.

    Actually, it does make it right.

    The officers of any publicly held company have an obligation to maximize shareholder value. If the laws allow Apple to avoid repatriation taxes through these techniques, then Apple officers are fulfilling their mandate to maximize shareholder value.
  • Reply 12 of 48
    geez with that sort of return, may as well keep it in the bank if it weren't for CPI
  • Reply 13 of 48
    entropysentropys Posts: 1,705member
    cnocbui wrote: »
    bobschlob wrote: »
     


    If it's legal, it's not "tax avoidance". It's just "taxes". Those are the rules, and you play by them.
    Whether you like it or not is irrelevant.


    I'll remind you of that if Australia decides to hit Apple and others with multi billion retrospective tax bills for avoidance.  You and others on here will be screaming blue murder and calling on the US to nuke Oz, no doubt, because it's so outrageously unfair.
    Apple hasn't been avoiding any tax it is liable, despite what some grandstanding senate taxeater says.

    Here is the great Kerry Packer, a smaller Murdoch competitor, letting these parasites know exactly what he thinks of them and their ilk (it goes for 2:49. Jump through to the 2:00 mark for his views on tax minimisation).

    [VIDEO]
  • Reply 14 of 48
    mike1mike1 Posts: 1,884member
    Quote:

    Originally Posted by justbobf View Post



    I really dislike the length Apple goes through to avoid paying taxes. I generally like Apple, but not when it comes to these shenanigans.

    You're just wrong. Apple is not avoiding taxes at all. They paid taxes on this overseas money to the countries in which it was earned. What is wrong is that they would have to pay taxes AGAIN to the US government in order to bring the money back to the States. A very short-sighted policy. It's not just Apple. There are billions and billions of dollars from Apple and others that could come back to the US and help the US economy instead. But why should the companies have to be pay the piper twice?

  • Reply 15 of 48
    Can someone explain who is actually selling the bonds and who is able to purchase them. An article in the Sydney Morning Herald stated that "fixed-income investors were notified". Is Joe Blow able to buy a bond or is this primarily a corporate deal?
  • Reply 16 of 48
    cnocbuicnocbui Posts: 3,613member
    Quote:

    Originally Posted by Entropys View Post





    Apple hasn't been avoiding any tax it is liable, despite what some grandstanding senate taxeater says.



    Here is the great Kerry Packer, a smaller Murdoch competitor, letting these parasites know exactly what he thinks of them and their ilk (it goes for 2:49. Jump through to the 2:00 mark for his views on tax minimisation).






    Yes it has.  It has engineered outrageous business practices and structures which quite obviously are not for practical or realistic operational logistics and which very, very clearly have been constructed solely for the purpose of minimizing tax.  Australian tax law has an element requiring a certain adherence to the spirit of the law, and not just technical legality.

     

    While it is a very easy and obvious thing to just say fix the legislation, in practical terms it probably isn't that easy.  The so called loopholes aren't 'mistakes' and were probably legitimately construed because some companies operations quite legitimately required certain reliefs so as to not be treated unfairly.  What's happened is that these measures that were intended to be fair for company A, end up being exploited by companies B, C and D which don't have an operational necessity for the provision but see it as an opportunity to rearrange their practices to EXPLOIT what was envisioned and purposed for a different context.

     

    It has gotten so bad that perhaps tax legislation needs to be company specific to stop this sort of rorting.

  • Reply 17 of 48
    cnocbuicnocbui Posts: 3,613member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Stop crying like a baby.

    Change the damn laws or STFU.

     

    But the politicians don't want to change the laws because they themselves are taking advantage of the SAME LOOPHOLES as Apple.




    Which Australian politicians are exploiting those loopholes?  Name them and describe their tax minimisation schemes.

     

    You aren't, perhaps, confusing Australian politicians for US ones where I understand a large proportion of the Senate and Congress are millionaires?

     

    Prove what you are alleging or YOU STFU!

  • Reply 18 of 48
    crowleycrowley Posts: 5,826member
    ascii wrote: »
    Is this correct? They can't repatriate their overseas profits to the US without paying tax, but if they sell bonds overseas the money they get for those can enter the US tax free. And then in 5 or 7 years when the bonds fall due, they just pay back the overseas investors with the offshore profits which stayed there all along.
    They won't be able to use the offshore profit to pay it back. Apple Inc in the USA is issuing the bond, so Apple Inc in the USA needs to pay it back.
  • Reply 19 of 48
    crowley wrote: »
    ascii wrote: »
    Is this correct? They can't repatriate their overseas profits to the US without paying tax, but if they sell bonds overseas the money they get for those can enter the US tax free. And then in 5 or 7 years when the bonds fall due, they just pay back the overseas investors with the offshore profits which stayed there all along.
    They won't be able to use the offshore profit to pay it back. Apple Inc in the USA is issuing the bond, so Apple Inc in the USA needs to pay it back.

    Crowley is exactly right. We seem to go through the same explanation every time there is a story on a foreign bond issue by Apple!

    Yes, the proceeds of the issue can be used to buy back shares in the U.S., but the payment of coupon and principal on the bond MUST be from cash flow generated in the U.S. Overseas cash CANNOT be used, unless the incremental tax owed is paid.
  • Reply 20 of 48
    cnocbuicnocbui Posts: 3,613member
    Quote:

    Originally Posted by sog35 View Post

     

     

    Don't be so naive.  Australia is full of corrupt politicans like every other country.

     

    Tax Office statistics reveal the 55 millionaires who paid no tax

    http://www.smh.com.au/federal-politics/political-news/tax-office-statistics-reveal-the-55-millionaires-who-paid-no-tax-20150429-1mw2zp.html

     

     

     

    You can bet a ton of politicians helped their friends avoid taxes.

     

    Ask yourself: Why doesn't the lawmakers close these loopholes Apple uses?  The answer is because these lawmakers friends use the same loopholes.

     

    All this could be avoided if countries simplified the tax laws.  But the WON'T.  Do you know why?  Because if the laws were simple than an average citizen would be on even ground with the wealthy.  The lawmakers and their friends don't want that.  They want the laws to be incredibly complicated so only the ultra rich can take advantage of these laws.  

     

    So stop blaming Apple.  Blame the lawmakers.  Tell them to change the laws or STFU.


     

    I asked you to name the politicians who you said use the same tax minimistaion schemes Apple uses.

     

    Unsurprisingly, you haven't done that, because it was your typical boldly stated BS. Providing an article that doesn't name a single politician as being a tax minimiser doesn't back up your statement and is utterly irrelevant.

     

    Now you are making further statements about the level of corruption amongst Australian politicians.  I have no doubt that there is some corruption, with some politicians, but in general I would say the level is likely to be far lower than is the case in the US, which ranks at 17th in world corruption rankings while Australia ranks at 11th, making it one of the least corrupt countries there is.  And stop calling me naive.  I suspect I have a far better grasp of the character of Australian society than you do, having lived there for several decades.

     

    Quote:


     Ask yourself: Why doesn't the lawmakers close these loopholes Apple uses?  The answer is because these lawmakers friends use the same loopholes.

     


    I already addressed that point a couple posts back.  I suggest you read it.  And once again, you are wrong.

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