Apple Inc. (AAPL) Sells $1 Billion Bond in Taiwan; Here’s Why

Apple Inc. (NASDAQ:AAPL)

Apple Inc.  issued a 30-year U.S. dollar bond in Taiwan to raise about $1.2 billion. The bonds carries a yield of 4.15%, Reuters reported, citing people familiar with the issuance. This yield seems to be lower than Intel and other companies, but this is the company’s first issue of debt on the island. Also, these number aren’t official numbers from Apple.

Taiwan is home to Apple’s supply chain partners including iPhone assembler Foxconn, Taiwan Semiconductor Manufacturing and Largan Precision.

Apple Inc. (NASDAQ:AAPL)

Low Bond Yield In Taiwan

Apple is looking to raise up to $4 billion through the sale of bonds in Taiwan and Australia. The company may also issue bonds in Japan and Singapore.

It seems that Apple selected the Taiwanese market to issue the bonds due to the high liquidity. Investors here are seeking creditworthy names and chasing higher yields. Cathay Financial Holding, the parent of Taiwan’s biggest life insurer, brought a small chunk of the issue.

Last year, U.S. chipmaker Intel sold $915 million of 30-year bonds with yields of 4.7% in Taiwan. Global brewer Anheuser Busch InBev issued a $1.5 billion bond of the same maturity at 4.915%, according to data from the Taipei Exchange.

Apple has more than $200 billion in cash, but the vast amount is held overseas. The company would have to pay significant a tax to bring it back to the U.S. Therefore, the bonds sale seems to be the option that the company wants to use for getting the capital.

Goldman Sachs Cuts Apple Price Target

Last week, Goldman Sachs cut its price target on Apple Inc. , reflecting lower growth expectations for the smartphone industry, CNBC reported.

The bank cut its price target to $124 from $136, while maintaining a “buy” rating.

Goldman Sachs is not optimistic about smartphone growth in next two year. For 2016, the bank reduced its global smartphone unit growth forecast to 5% from 6%, and to 4% from 7% for next year.

Additionally, the bank trimmed predicted iPhone unit sales to 211 million from 212 million for full-year 2016.

“We also fine-tune our iPhone forecasts by introducing a detailed regional build, updating our installed base model, and adding an inventory overlay. Even with these assumptions, which we view as conservative, our model implies upside to consensus estimates, and we maintain our ‘buy’ rating,” Goldman Sachs said in a research note.

FinTech Sector and 2016 WWDC

Apple could potentially be expanding its presence in the FinTech sector by allowing users to send money to their friends and family using the iMessage App. The Apple Pay service, which was launched in October 2014, allows users to use it as a digital wallet on devices such as the iPhone 6, iPhone 6 Plus, iPad Air 2 & iPad Mini 3 etc.

Apple’s much anticipated, annual Worldwide Developers Conference (WWDC) will take place next week in San Francisco, California. Rumors are swirling that suggest the company will announce upgrades to all its device operating systems, including iOS for iPhone and iPad, watchOS, tvOS and OS X for the Mac. The 2016 conference will be held from Monday, June 13 through Friday, June 17. The event allows thousands of developers from around the world to meet up with the iPhone maker’s engineers and participate valuable workshops and software sessions.

Shares of Apple Inc.  were up 0.74% as of 12:21PM EDT. The stock has 7.35% year-to-date.

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