(Bloomberg) – Apple Inc., one of the richest cash companies in the world, is looking to get a share of the ultra-cheap money the bond market offers.
With yields of investment grade bonds that are around historical lows, it is tempting even for Apple – with more than US $ 200,000 million in cash and investment values in its books – to see what investors will lend. It turns out that that number is US $ 7,000 million, or just over 3% of its current coffers.
With 30-year Treasury bonds at record lows, many companies have been able to obtain cheaper loans for much longer. Apple will pay around 2.98% interest on its new 30-year bonds, compared to the 3.45% it is paying for three-decade bonds sold in 2015. In a $ 1.5 billion issue, that amounts to a savings of just over $ 7 million in interest annually, or $ 211.5 million over the course of three decades.
Today's debt sale helps Apple refinance approximately $ 2 billion of debt that is scheduled to expire this year, in addition to much of the $ 10 billion that will expire in 2020, according to data compiled by Bloomberg.
Apple is not the only one who takes advantage of this golden opportunity. A record 21 US investment-grade companies exploded the market on Tuesday, with a total of US $ 27 billion in joint loans. With more than a dozen agreements in process on Wednesday, this week's issue is aimed at reaching US $ 54,000 million, which will comfortably exceed operators' estimates of US $ 40,000 million.
Original Note: Why Apple’s Borrowing $ 7 Billion Even With 30 Times That in Cash
–With the collaboration of Luke Kawa.
To contact the editor responsible for the translation of this note: Andrea Jaramillo, [email protected]
Reporter in the original note: Molly Smith in New York, [email protected]
Publishers responsible for the original note: Nikolaj Gammeltoft, [email protected], Allan Lopez, Dan Wilchins
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