Global technology giant Apple Inc is set to enter the Australian corporate bond market.
The world’s largest company has appointed three banks – Commonwealth Bank, Deutsche Bank and Goldman Sachs – to arrange a series of investor calls to update local bond managers on the “Apple credit” ahead of a possible debut bond issue.
Apple is rated AA+ by Standard & Poor’s and Aa1 by Moody’s. The company’s treasury team, which is based in Nevada, is understood to have kept a close eye on developments in the Australian bond market as it seeks to diversify its multi-billion dollar debt book.The company has raised funds in yen, Swiss francs and euros in addition to its main funding currency, US dollars. The company was said to be encouraged by a recent $700 million bond issue in the Australian market by global brewer SABMiller, giving it comfort it can diversify funding through an Australian bond issue, Apple has more than $US200 billion in cash sitting on its balance sheet, much of it stored offshore. But due to US government taxation rules it is unable to repatriate this cash. So, it borrows money, often in foreign currencies, and uses the proceeds to buy back stock and pay its shareholders a dividend. In April, the company said it would return $US 200 billion to shareholders through buybacks and dividends over the next two years.
CEO Tim Cook previously faced pressure from activist investor Carl Icahn to return more of Apple’s enormous cash hoard to shareholders. Apple has also invested a portion of its cash pile into Australian dollars and is understood to be one of the largest buyers of Australian bank commercial paper sold in the US.
