Apple seeks to raise $2B in Canadian debt offering

AppleInsider

Apple is looking to raise $2.5 billion Canadian dollars, worth $1.96 billion at current exchange rates, in its first Canadian debt offering, according to documents filed with the U.S. Securities and Exchange Commission on Tuesday.

Apple store in Brossard, Canada.

The SEC filing, which arrived just hours after a separate document announced the bond, provides details on Apple's first Canadian issuance.

According to the filing, Apple on Tuesday issued CA$2.5 billion in 2.513 percent notes maturing in August of 2024. The bond is underwritten by HSBC Securities (Canada) Inc., RBC Dominion Securities Inc., BMO Nesbitt Burns Inc., Goldman Sachs & Co. LLC with co-managers CIBC World Markets Inc., Merrill Lynch Canada Inc. and TD Securities Inc.

As noted earlier today, Apple intends to pay out interest on the notes in equal, semi-annual installments in February and August starting in 2018. The first interest payment will be a long first coupon payable on Feb. 19, 2018 in the amount of CA$31,584,623.29, the filing reads.

Apple has turned to debt markets instead of repatriating its gigantic offshore cash hoard, which stood at $261.5 billion at the end of the third fiscal quarter of 2017. The company uses bonds and other financial instruments to fund corporate initiatives and its capital return program.

Over the past few years, Apple has turned to debt markets in Australia, Japan, Switzerland, Taiwan, the UK.

Most recently, the company in May issued a $1 billion U.S. bond set to mature in 2027.

gmgravytrain

With as much cash flow as Apple has, is this debt offering seen as a problem or is it merely being mentioned. I'm always hearing some critic talking about all the debt Apple is accumulating and it seems as though Apple is making plenty of money as it is so I don't see it as a something to be concerned about. Tax reforms shouldn't be that far off so it's not as if Apple doesn't have the money. No one seems to make a big deal about Elon Musk and Tesla always asking for more money and Tesla doesn't even seem to be a profitable company at this point.

I'll admit I don't want to see Apple constantly taking on more debt for share buybacks, but as a shareholder, I don't mind getting the dividends. I know the two go hand-in-hand so I'm not complaining. I think Apple offering bonds and such are quite sensible but it seems as though Wall Street still has a problem with it. I hope it's not hurting Apple's valuation and keeping the P/E well below its peers. I just wish POTUS would start working on those tax reforms instead of threatening other countries.

jkichline

gmgravytrain said:

With as much cash flow as Apple has, is this debt offering seen as a problem or is it merely being mentioned. I'm always hearing some critic talking about all the debt Apple is accumulating and it seems as though Apple is making plenty of money as it is so I don't see it as a something to be concerned about. Tax reforms shouldn't be that far off so it's not as if Apple doesn't have the money. No one seems to make a big deal about Elon Musk and Tesla always asking for more money and Tesla doesn't even seem to be a profitable company at this point.

I'll admit I don't want to see Apple constantly taking on more debt for share buybacks, but as a shareholder, I don't mind getting the dividends. I know the two go hand-in-hand so I'm not complaining. I think Apple offering bonds and such are quite sensible but it seems as though Wall Street still has a problem with it. I hope it's not hurting Apple's valuation and keeping the P/E well below its peers. I just wish POTUS would start working on those tax reforms instead of threatening other countries.

It’s called a “debt to assets ratio”.  As long as you are not debt encumbered, it’s actually pretty health to leverage financial markets.  The reasoning is that Apple would pay more money to repatriate that money than they would to pay interest on the debt.  That’s really the way to look at this sort of financial leverage... if you can get a higher return on your liquid cash, then take out debt at a rate that’s lower than that return and you’re still coming out on top.

As a general rule of thumb, a debt to assets ratio of 0.4 or lower is usually good for any business.  Apple is in no danger of defaulting and could probably leverage up to 50% of their assets in debt. Given that Apple has billions in assets, a few billion is a drop in the bucket as far as debt is concerned.

razorpit

gmgravytrain said:

 I just wish the democrats and republicans in congress would get their heads out of their rectums and support the POTUS on the tax reforms we need, and that other countries such as North Korea would knock it off already.

Hope you don't mind my edit.

22july2013

razorpit said:

gmgravytrain said:

 I just wish the democrats and republicans in congress would get their heads out of their rectums and support the POTUS on the tax reforms we need, and that other countries such as North Korea would knock it off already.

Hope you don't mind my edit.

I actually thought he meant threaten other countries economically, not militarily. Not sure now which interpretations is correct. One thing for sure, North Korea doesn't threaten the US economically.

razorpit

22july2013 said:

One thing for sure, North Korea doesn't threaten the US economically.

LOL, ya can't think anything coming out of NK that would hurt the US economy.