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

Bitcoin Bubble?

According to Robert Shiller , speaking at Davos, Bitcoin is a perfect example of a bubble - story here . Shiller sees Bitcoin as a backwards step in the evolution of money.   George Selgin , a free banker, takes an opposing view - click here .  Although he doesn't believe that Bitcoin is money, he sees its development as a fascinating turn in the evolution of money. In particular, he lauds the fact that Bitcoin production is constrained and cannot be infinite. There is a short video below where Bitcoin explain how it works.

How Valuable Are Connections?

Daron Acemoglu, Simon Johnson, Amir Kermani, James Kwak and Todd Mitton have written a paper on whether firms connected to Timothy Geithner benefited from these connections. They do so by looking at how stocks of these firms reacted to the announcement that he was a nominee for Treasury Secretary in November 2008. They find that there were large abnormal returns for connected firms. Below is the paper's abstract and the full paper is available here . The announcement of Timothy Geithner as nominee for Treasury Secretary in November 2008 produced a cumulative abnormal return for financial firms with which he had a connection. This return was about 6% after the first full day of trading and about 12% after ten trading days. There were subsequently abnormal negative returns for connected firms when news broke that Geithner's confirmation might be derailed by tax issues. Excess returns for connected firms may reflect the perceived impact of relying on the advice of a small ne

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 .