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YEN-DENOMINATED BONDS TO BE ISSUED BY APPLE

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YEN-DENOMINATED BONDS TO BE ISSUED BY APPLE

May 28 2015, 06.55am GMT

STOCK.com

On Wednesday, it was revealed that in June this year, Apple Inc. (NASDAQ: AAPL) will most likely issue its first yen-dominated (JPY) bond.

This move will mark the company’s most recent move in a bid to take advantage of low interest rates in markets outside of the U.S.

The technology giant will issue about $1.6 billion (¥200 billion) of bonds and these proceeds will then be used for returns to shareholders and also possibly to further expand on operations in Japan, according to an unidentified source that is familiar with this matter. Added to this, the price and amounts of the issuance are not yet fixed and may change with demand from investors.

A spokesperson from Apple declined to comment.

Interestingly, bond yields and issuance costs in Japan are some of the world’s lowest, as the interest rates are currently being kept low by the central bank, Bank of Japan, with its huge monetary easing program. Usually foreign yen bond issuers look to diversify funding and to target investors who are eager for yield, despite the fact that the bonds come with some currency risk.

Meanwhile, on Tuesday, the Japanese yen (JPY) hit a nearly 8 year low against the U.S. dollar (USD). Participants in the bond market have said that the Apple issuance will most likely attract strong interest from investors domestically if it can offer a compettive yield.

Currently in Japan, Apple has several flagship stores and the company’s iPhone has the majority share of the smartphone market locally. Apple have managed to overshadow domestic handset providers like Sharp Corp. (TYO: 6753) and Sony Corp. (TYO: 6758), as well as international competitors like Samsung Electronics Co. (KRX: 005930), in this area.

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