I'm grateful for all the explanations, especially the link to the Forbes article. I was really at a loss for why they would be selling bonds but it makes perfect sense now. Thanks.
Our tax system is really screwed up. We tax every dollar multiple times. When a company earns it, when they use it to pay employees and again when we spend it. We even get taxed on Federal tax refunds! Fun stuff.
Many countries have participation exemption regime for foreign soruce dividends which means that any income derived from dividends distributed by Apple's subsidiaries offshore are tax exempt when you receive them (you dont pay income tax on those earnings). The reason for this exemption, and which US dont have, is because you already paid your taxes in the country where the profits were made, so logicall, you should not be taxed two times on the same income when you distributed this income as dividends to your shareholders (i.e. Apple Inc. as the parent company and beneficiery of the dividends).
So, what is cheaper if you need cash do pay to your shareholders in the US? Issue bonds on super low interest rate or take cash in the form of dividends from your rich subsidiaries offshore and paying 35% tax? If US dont change this and does not provide a tax holiday for certain amount of time, US would live always on debt, and less on equity and real cash.
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Tax efficient, you can set interest payments against profits so they can reduce the tax bill even further.
Well, thats not the main reason, although is a plus for this kind of operations. You see, the interest rate that a rich company like Apple is paying is minimum, becuase there is zero risk in mid-long term. Its like giving 20$ to Bill Gates because the ATM doesnt accept his credit card and thinking if he would be able to give you back the money. Hell yes. That the reason why Apple bond is probably the safes investment you can make after the Switzerlands public bonds.