Skip to main content

Apple's Bond Issue

Following announcements that it was increasing its dividend and launching a $60bn share buyback scheme, Apple announced today that it was hoping to raise $17bn by selling corporate bonds. Why does a company with $137bn  of cash on its balance sheet want to borrow? The explanation being given by analysts is that $100bn of Apple's cash pile is overseas and it would have to pay a 35% tax on it if it wanted to repatriate it. In addition, borrowing is very cheap at the minute for AAA-rated companies such as Apple. In other words, in order to return cash to shareholders, Apple is going to finance a proportion of it with debt! It seems that Apple is desperate to hold unto its cash pile for a while yet.  

Graphic: Apple at a glance
Source: Daily Telegraph

Popular posts from this blog

The Failure of Herstatt Bank

As an undergraduate, I was taught about the failure of Herstatt Bank in 1974 and Herstatt risk. This bank was only the 35th largest bank in Germany at the time so why would anyone be interested in studying its failure? Herstatt failed because of its involvement in risky foreign exchange business. When it closed its doors on 26 June 1974, counterparty banks (mainly in New York) had not received dollars due to them because of time-zone differences - this is known as settlement risk. The cross-jurisdictional implications of its failure resulted in the Bank for International Settlements setting up the Basel Committee on Banking Supervision and Herstatt's failure was a key reason for the establishment of real-time gross settlements systems, which ensures that payments between two banks are executed in real time. The Bank of England's Ben Norman has an interesting post on Herstatt over at the Bank's new blog ( Bank Underground ). As well as giving an excellent overview of
Read more

Boom and Bust: A Global History of Financial Bubbles

Boom and Bust: A Global History of Financial Bubbles, co-authored with my colleague Will Quinn , is forthcoming in August. It is published by Cambridge University Press and is available for pre-order at Amazon , Barnes and Noble , Waterstones and Cambridge University Press . 
Read more

The Great Depression

Marginal Revolution University has a great video on the Great Depression.
Read more