Apple Has $210B In Cash, So Why Did It Just Borrow $7B?

Jayson Derrick
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Apple Inc. (NASDAQ: AAPL) ended the fiscal third quarter with around $210 billion in cash on its balance sheet, which has some investors wondering why it just borrowed $7 billion through a bond offering.

What Happened

Apple doesn't need an extra $7 billion in cash, but nevertheless proceeded with a new bond offering, Bloomberg reported.

The iPhone maker will pay just shy of 3% in interest on 30-year bonds, which is a better rate than the 3.45% it now pays on 30-year bonds as part of a 2015 issue.

Apple said its bond raise is for general corporate usage, which implies it could be allocated to pay down more expensive debt, fund acquisitions, finance share buybacks or "anything under the sun," Bloomberg's Molly Smith said on "Bloomberg Technology" Wednesday.

Why It's Important

Bond investors are more than happy to lend Apple money, and the books on the latest offering were rumored to be oversubscribed to the tune of $20 billion, Smith said.

Investors are attracted to a debt that yields close to 3%, especially with $17 trillion worth of bonds worldwide offering negative yields.

What's Next

Apple's new, cheaper debt will cost $7 million less per year to finance, or $200 million through 2049.

The company has around $2 billion in debt that will mature this year, with another approximate $10 billion coming due next year, according to data compiled by Bloomberg.

Apple shares were trading higher by 1.73% at $212.81 at the time of publication Thursday.

Related Links:

Apple Is Tapping The Debt Market... Again

Did You Know Apple Invested 8 Billion In Foreign Corporate Debt?

Photo courtesy of Apple.

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