Apple Files To Sell Seven Part, Multi-Billion Debt Offering

Tyler Durden's picture


In what turned out to be immaculate timing, it was only yesterday that we previewed the collapse in Apple's domestic cash hoard (at the expense of its soaring, if non-recourse offshore cash)... 

... which we concluded by saying that "what this simply means is that after making the history books with the biggest ever, $17 billion bond offering 12 months ago, Apple is about to issue a whole lot more of debt." Less than 24 hours later, it did just that.

Moments ago Apple filed a bond offering prospectus, in which it laid out a 7-part bond offering consisting of two FRN tranches (due 2017 and 2019), and 5 fixed rate tranches (due 2017, 2019, 2021, 2024 and 2044), with Goldman and Deustche Bank as lead underwrtiers.

The amount on the tranches are still unknown, although according to preliminary reports they will likely match or surpass the record Apple bond offering from last year, in which the company sold $17 billion in debt.

Bloomberg reports the indicative pricing terms on the various tranches:

  • 5Y FRN 3ML +43 AREA
  • 3Y FIXED IPT +30 A,
  • 5Y FIXED +50 A;
  • 7Y NOTES IPT +75 AREA,
  • 10Y NOTES +90 AREA,
  • 30Y NOTES +115-120

As a reminder, in last year's offering, AAPL issued the following debt:

  • FRNs 2016: $1 billion
  • FRNs 2018: $2 billion
  • Fixed 2016: $1.5 billion
  • Fixed 2018: $4 billion
  • Fixed 2023: $5.5 billion
  • Fixed 2043: $3 billion

As a further reminder, anyone who bought into the 10, and especially 30 year bond offering from last year, was promptly down anywhere between 5 and 10% in absolute price terms shortly thereafter. We expect the same non-flippable event to repeat itself with this issue as well, especially since in light of Apple's 50% expansion in its capital plan to $90 billion per year, we fully expect that the company will have to access the debt capital markets at least once more, and maybe twice, in the next 12 months to maintain its domestic cash balance at minimum safe levels.

Perhaps most important from a market perspective, as bond buyers rush to accumulate positions, they will short matched treasurys to hedge interest rate risk. As a result, since algos translate any bond selling as bullish for stocks, look for an equity pop as accounts position themselves to load up on AAPL bonds.

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Tue, 04/29/2014 - 08:04 | 4707062 dirtyfiles
dirtyfiles's picture

AAPL's not good for you

Tue, 04/29/2014 - 08:11 | 4707082 max2205
max2205's picture

Deustche Bank huh?    I guess Germany will drop a few lawsuits against aapl soon



Tue, 04/29/2014 - 08:21 | 4707103 Headbanger
Headbanger's picture
Ficken Apfel!
Tue, 04/29/2014 - 08:32 | 4707134 NoDebt
NoDebt's picture

Why doesn't Apple reincorporate as a bank holding company and get their money free of intrest charges straight from the Federal Reserve?

Tue, 04/29/2014 - 08:40 | 4707158 fonestar
fonestar's picture

More cRAAPL for iDiots who believe the current consumer orgy can be maintained amongst depleting fossil fuels, a crumbling fiat empire and growing global instability.

Tue, 04/29/2014 - 09:13 | 4707288 johnnyarrowmaker
johnnyarrowmaker's picture

erm .... I always thought they were a bank holding company - apple investment machine, based somewhere in the stratosphere.  The only company resident for tax purposes on Mars.

Tue, 04/29/2014 - 13:59 | 4708715 Theosebes Goodfellow
Theosebes Goodfellow's picture

You've got to love how Barron's is painting them though. You can almost envision them with their little hard hats, hard at work.

~"Financial Engineers Hard at Work at Apple, Pfizer"~

Kind of makes you think of little Umpa-Lumpas just shoveling away at piles of money.

Tue, 04/29/2014 - 08:13 | 4707084 toys for tits
toys for tits's picture

Corporate tax rates in the US is a joke.  We see what Apple is having to do to avoid the scam and Now the older-than-dirt Walgreen's is going to relocate its headquarters offshore to be able to compete.

Tue, 04/29/2014 - 09:20 | 4707320 disabledvet
disabledvet's picture

More like "Dicks in a row."

I'm mean full of RJR Nabisco?

"Just make crappy phones bitch." Move along.

Tue, 04/29/2014 - 09:15 | 4707294 johnnyarrowmaker
johnnyarrowmaker's picture

offshore is so blase - try off planet.  I hear the moon and Mars are tax free, but watch out for Venus.

The sad thing is, I'm not joking.  Check out where Apple are resident for tax purposes, it ain't the USA.

Tue, 04/29/2014 - 09:15 | 4707297 Buckaroo Banzai
Buckaroo Banzai's picture

Corporations, as artificial creatures of government charter, should be heavily taxed for their privileges-- which are substantial.

Instead, the corporate golems run free, while natural humans are taxed relentlessly.


Tue, 04/29/2014 - 10:03 | 4707503 toys for tits
toys for tits's picture

Corporations don't pay taxes, the end-user individual does.  Any taxes 'paid' are incorporated into the price of the product to the end user.  That's why embedded taxes average about 20% of the price of products.  


Bet you didn't realize you're paying that more taxes, did ya?

The 'Fair Tax' proponents do a good job laying it out.

Tue, 04/29/2014 - 08:04 | 4707064 happel
happel's picture

Still do not comprehend why company with a hoard of cash is raising money in the debt markets.

Tue, 04/29/2014 - 08:12 | 4707076 tip e. canoe
tip e. canoe's picture

Because it's their turn to shovel debt dollars to help keep the zombie ponzi alive?

Remember, an apple, no matter how huge, never falls far from the tree that spawned it.

Tue, 04/29/2014 - 09:22 | 4707328 disabledvet
disabledvet's picture

More like a weeping willow.

"Eventually those branches will start to crack."

Tue, 04/29/2014 - 08:29 | 4707105 Dr. Engali
Dr. Engali's picture

It is much more efficient to avoid paying taxes by taking on debt rather than repatriating that cash. They will pay 3.5 % to service their debt vs paying 40% in taxes if they were to repatriate their cash hoard. Once they have the debt they can service it in any manner they wish. It's fucked up and they are another example of a hypocritical liberal company who will support any liberal project that gubbermint comes up with but then they avoid paying for it.

Now that they have run out of innovative ideas, and they never did make anything it's time to loot the company and Joe six packs 401k so that the insiders and the bankers can get paid.

Tue, 04/29/2014 - 08:33 | 4707137 y3maxx
y3maxx's picture

"Now that they have run out of innovative ideas, and they never did make anything it's time to loot the company and Joe six packs 401k so that the insiders and the bankers can get paid."

...Agreed, the end of times for America process continues, looting 401K's and channeling the $$$ to the Bankers.

Tue, 04/29/2014 - 08:33 | 4707138 NoDebt
NoDebt's picture

Well, whey you say it like THAT it sounds all bad and stuff.

Tue, 04/29/2014 - 09:35 | 4707379 WhyWait
WhyWait's picture

Forgive my ignorance ... Apple taking on debt is so absurd on the face of it that it has to be a scam, but your explaination doesn't seem to add up.  Borrowing money doesn't soak up that pile of cash, it just adds to it.  How does borrowing cut taxes, launder that cash pile or serve any conceivable legitimate purpose?



Tue, 04/29/2014 - 09:55 | 4707467 Dr. Engali
Dr. Engali's picture

They use the cash from the debt to reward shareholders in the form of dividends and buy backs.  Then they use the cash from overseas operations to service the debt. That way the cash was never brought home and they don't have to pay taxes on it.

Tue, 04/29/2014 - 10:12 | 4707534 WhyWait
WhyWait's picture

Thanks. Makes sense.  Evidence?

Tue, 04/29/2014 - 10:26 | 4707592 Dr. Engali
Dr. Engali's picture

What evidence do I need? This is has been the long standing modus aperandi for global conglomerates get around the tax barrier. Why do you think they are using the squid and douche bank as the underwriters? They have a global footprint which allows the debt to be serviced with monies earned any place across the planet and not have tax consequences..   

Tue, 04/29/2014 - 08:45 | 4707106 williambanzai7
williambanzai7's picture

Thinking about this, as the devil's advocate, I would suggest reducing the amount of your share float held by hedge funds and so called activist financiers like Icahn.

Cook apparently detests those guys.

I suppose if you have the cash flow to service it, what better time than money printing time?

I am sure the idea behind the stock split is also to further diversify the universe of shareholders, which is concentrated on Wall Street.

Financial wizardry has now replaced technical wizardry as the top priority.


Tue, 04/29/2014 - 09:18 | 4707308 johnnyarrowmaker
johnnyarrowmaker's picture

Whoa there, you mean YOU would turn down trillions of free Dollars that come with NO strings attached??  Gimmeeeee.

Oh yeah, I forgot, you gotta sell your soul and become a fully Fledged Bankster first.

Tue, 04/29/2014 - 08:05 | 4707067 buzzsaw99
buzzsaw99's picture

they will sqirm like a worm, roll around on the floor, whatever it takes, but they ain't gonna pay their taxes

Tue, 04/29/2014 - 08:10 | 4707075 buzzsaw99
buzzsaw99's picture

yeah, paying taxes on chinese slave labor sux ass. take another bonus bitchez.

Tue, 04/29/2014 - 08:08 | 4707074 valley chick
valley chick's picture


Tue, 04/29/2014 - 08:16 | 4707091 Smegley Wanxalot
Smegley Wanxalot's picture

An AAPL a day keeps the algos at bay.

Tue, 04/29/2014 - 08:20 | 4707100 LawsofPhysics
LawsofPhysics's picture

The best way to rob a bank (and taxpayers) is to become a bank...


Tue, 04/29/2014 - 08:28 | 4707121 Baby Eating Dingo22
Baby Eating Dingo22's picture

Isn't it funny how mega corporations are eventually drawn into the banking business

Guess they are comforted knowing the government will always have their back

And of course money for nothing and chicks for free is kind of nice

Tue, 04/29/2014 - 08:49 | 4707190 yogibear
yogibear's picture

Cook the books, shift real reserves overseas and convert to non-US assets, bankrupt the bank and ask for a bailout.

Sitting pretty with billions offshore. It's fraud but encouraged by Eric Holder and Obama.

Repeat over and over again.

Tue, 04/29/2014 - 09:11 | 4707278 LawsofPhysics
LawsofPhysics's picture

Don't be such a fucking political tool.  This has been happening for several decades fucknut.

Tue, 04/29/2014 - 09:18 | 4707310 Buckaroo Banzai
Buckaroo Banzai's picture

True, but one should NEVER miss the opportunity to call out Obama and Holder for the cunts they are.

Tue, 04/29/2014 - 09:23 | 4707332 LawsofPhysics
LawsofPhysics's picture

Right, because "calling out" all these cunts has worked so well.


Let me be clear; Roll the motherfucking guillotines...

nothing changes otherwise.

Tue, 04/29/2014 - 10:20 | 4707566 ShorTed
ShorTed's picture

I appreciate the sentiment Laws but who is going to roll the guillotines?  Who decides the victims?  Who decides when enough punishment has been meted out and when to stop? 

Calling for the guillotines is really no different than calling out Obama because as you so aptly say, nothing changes.

Tue, 04/29/2014 - 08:28 | 4707123 Squid Viscous
Squid Viscous's picture

when they announce the Applewatch, AppleTV, and Apple ass-scratcher you're all gonna wish you were long ...  

Tue, 04/29/2014 - 08:37 | 4707135 firstdivision
firstdivision's picture

~5% interest loan for 30 years....yeah inflation is going to bite the buyers asses on that one.  With the way we have mimiced the 70's I'm waiting for 20% inflation to hit in the next few years.  Then I'll buy some bonds by selling a few rolls of toilet paper.

Tue, 04/29/2014 - 08:37 | 4707139 Blame Crash
Blame Crash's picture

It amazing what you can get away with when you wrap yourself in the Prog flag and put on all the snot nosed airs that go with it.

Tue, 04/29/2014 - 08:33 | 4707140 Budd aka Sidewinder
Budd aka Sidewinder's picture

Goldman and Deutsche Bank???

Wasn't there a story in some book about Satan and an Apple and a fall from grace?

Tue, 04/29/2014 - 08:52 | 4707204 _SILENCER
_SILENCER's picture

I'm obviously not in the finance world, so I didn't really get all this. Is this saying that apple is getting into the loan business? Meaning they'll take on the credit end when customers buy shitloads of iCrap, or getting in bed with megabanks for wall street shennaigans, essentially becoming a bank itself?

Tue, 04/29/2014 - 08:55 | 4707212 Dr. Engali
Dr. Engali's picture

Read my post in response to this question by another commentator. 

Tue, 04/29/2014 - 09:01 | 4707241 _SILENCER
_SILENCER's picture


So it costs less to be part of the beast that it's subject. That's an oldie but a goodie.

Well, apple can get away with that because they're allegedly liberal.  And by that I mean making their products in dire, foreign, slave farms and hoarding money offshore.

Tue, 04/29/2014 - 08:56 | 4707218 SillyWabbits
SillyWabbits's picture

In the interest of “free markets”; one should be able to abscond with whatever one can and avoid “responsibility” where ever possible.

Remember. When Smith defined “free market”; the currency was gold.  The “Invisible Hand” was that money was a store of value.

The capitalistic hand of today is for grabbing – not building.

The Invisible Hand has become the Insatiable Hand!

Tue, 04/29/2014 - 08:56 | 4707219 undercover brother
undercover brother's picture

zzzzzzz.  more crapple creative financing.  whatever.

Tue, 04/29/2014 - 09:17 | 4707303 SillyWabbits
SillyWabbits's picture

BTW!  Doesn’t the cash; regardless where stored, belong to the shareholders?  Tax avoidance to horde cash: increasing the tax burden upon shareholders via increased local and federal levys, while enriching the 1% via commissioned bond sales, which become “bonus payments” and taxable income at around the 8% level, does not seem to be in the “shareholders” interest. Unless the “shareholder” is a greedy oger, effectively transferring the cash horde to themseslves via the corporate form.

Otherwise, it does not serve the corporate good, nor the general public well.  Perhaps this is Cook sayig to Icon, if you what the cash, we will lever up the company to get it to you.  You as a shareholder will bear the burden, except of course he won’t.

Tue, 04/29/2014 - 09:27 | 4707346 WhyWait
WhyWait's picture

OK please explain to this iDiot -

Why would a company sitting on so much cash want to load up on debt?  

 Apple has the largest pool of cash on hand of any non-financial corporation in history, right?  

Apple apparently can't find a way to invest that money profitably in the real economy, right?

They could use it to buy back all their public stock, or invest it in financial bubbles, allowing their owners to bail out, hopefully at the top - is there any sign that's going on?  Or are there hints of another possible use developing for that pile of cash?

Could this round of borrowing serve the same purpose?  Will the money taken in be skimmed by the owners on their way out the door?  And how will this work?  

And then who will be left owning the corporation?  Or will it be left to go bankrupt?  Could it go bankrupt?

Or is there some normal working of financial markets going on here that is beyond the ken of us uninitiated?

Tue, 04/29/2014 - 09:45 | 4707419 Fix-ItSilly
Fix-ItSilly's picture

Because to cheat the US Govt of rightful taxes, Apple pretends huge somes of money were earned by skeletally staffed offices in foreign countries where it does little true business.  Like Timchenko, Sechin, et al, Apple has its hideaways.  Will the US Govt sanction them at some point?  You betcha - and then the debt on its books will be seen as a tax dodge, not a Wall Street funding fest.

Tue, 04/29/2014 - 09:34 | 4707374 yogibear
yogibear's picture

Apple has become another Wall Street MBA suit shop. Another Microsoft. The Steve Jobs pipeline is empty.

Tue, 04/29/2014 - 09:51 | 4707450 toadold
toadold's picture

A lot of companies are moving to avoid not only taxes but also regulations.  Toyota is moving its headquarters and advetising dept. out of Torrence California to Plano, Texas just North of Dallas.  A couple of accounting firms back in 2007? moved their headquarters to  London and were paying their US employees out of their London offices. You don't think of London as particularlly low tax but as we have observed over the years, regulations can be somewhat lax.  

Tue, 04/29/2014 - 11:33 | 4707878 Dewey Cheatum Howe
Dewey Cheatum Howe's picture

God fucking forbid they pull some of that offshore cash back into the domestic realm, oh wait they might actually to pay taxes on it....

At some point all that offshore cash is going to get so diluted by debt when they can't issue anymore since the revenues won't support it the whole thing implodes.

BTW I am not bagging on Apple here for offshoring the cash, the system is fucked up to begin with, them offshoring cash is just a consequence of it.

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