Sums done by Moody’s Investment Services (via Bloomberg) confirm reports that Apple’s approach of borrowing the $100b needed to fund its stock buy-back and dividend plans
will result in massive tax savings, estimated at $9.2B …
Based on current rates, Apple will pay interest of about $308 million a
year on the $17 billion bond offering, said Gerald Granovsky, a senior vice
president at Moody’s.
“From a pure corporate-finance theory perspective, this was a
no-brainer,” Granovsky said. If the funds had come from Apple’s offshore
cash pile of about $100 billion, the Cupertino, California-based iPhone maker
would have had to pay a 35 percent tax to repatriate the money, Granovsky said.
That means Apple avoided about $9.2 billion in taxes. And since interest
payments are tax-deductible, that’s another $100 million a year, Granovsky
said.
Apple’s $17B bond issue set a new corporate record. Interest in the bonds continued after the
sale was completed, with MarketWatch reporting unprecedented levels of trading in Apple bonds in the 48 hours
after issue. [Source]
You can
follow me on Twitter, add me to your circles on Google+
or Subscribe to me on facebook
or YouTube.
You can also check my website
and blog
to keep yourself updated with
what is happening in the ever changing world of technology
