According to Reuters, Apple took initial steps for what would be its first debt sale ever, as the US computer giant lays the groundwork for what would be one of the most anticipated bond sales of the year. If the hype like that continues then there will be a queue of fanboys outside Apple stores hoping to buy the company’s bonds, not really aware of what they are and probably thinking they are a new form of smartphone.
Apple does not have any debt but the company is going to sell debt for the first time to help fund a $100 billion capital return program for shareholders. Reuters insists that there are shedloads of people out their desperate to buy bonds in a company which is losing value faster than milk left out in the Roman sunshine.
“Any bond offer from the makers of the iconic iPhone and iPad would be highly sought after by investors, and it is believed the company could raise funds at a cheaper rate than even Triple A rated Microsoft,” Reuters breathes excitedly.
The Triple A rating is a bizarre comment. Apple can’t get the coveted Triple A rating from agencies because of its falling profits. S&P awarded the company an AA+ rating after last week's announcement, while Moody's rated it Aa1. Moodys said that Apple faces long term risks for any company with high exposure to shifting consumer preferences. In other words Apple is based on hype and when consumers get bored with the iPhone they will look somewhere else.
Apple has $145 billion of cash - but only $45 billion on hand in the US, and thus not enough to fully fund the share buy-back programme. Still it is a sad state of affairs that the press has to hype up a bond sale on behalf of Apple.