Ali Bonds: Again Rich Companies Also Need Cheap Money.

　　 Ali is so rich. Why do he issue bonds?

Take apples for example. Apple Corp is rich in cash and is world-famous. In 2013, Q1 was 145 billion dollars in cash. In April 30, 2013, $17 billion was issued successfully, which is the first time that Apple Corp has issued bonds since it was launched in 1996.

The Apple Corp issue is to give shareholders a cash dividend of $100 billion in three years to maintain a strong share price. Apple Corp's share price began to decline from the highest point of $705.07 in September 2012, and its share price shrank by 40% over the past six months, evaporating over 270 billion dollars. New York time November 19th, Apple Corp stock price closed at 114.67 US dollars, according to this year 1 remove 7 to restore power, Apple's stock price is 802.69 dollars, very strong.

　　 Issuing bonds can also move funds. tax avoidance 。

Apple's $145 billion cash is only about $45 billion in the US, and about $100 billion in cash is left overseas at low tax rates. If cash is transferred to the United States for shareholder returns, the tax must be paid at a rate of 35%. Apple Corp issued a $17 billion bond to provide some capital for the share repurchase program, which means that Apple Corp will successfully tax evasion $9 billion 200 million, which is equivalent to the sales revenue of apple Mac desktop in 2012, which exceeds the profit of Apple Corp in 2009.

Issuing bonds can use cheap money. With the help of quantitative easing and low interest rates, the cost of issuing bonds by governments and enterprises has been very low in recent two years. Apple Corp issued last year's bonds contained 6 different categories, including 3 year, 5 year, 10 year and 30 year fixed rate bonds, and 3 year and 5 year floating rate notes. The interest rates of 3 - and 5 - year floating rate bills are 5 basis points and 25 basis points of Libor interest rates for the same period. Apple Corp's short and short term bonds enjoy the level of national debt.

Apple Corp's 7 year interest rate is about 35%, and the cost of issuing bonds is only 2% to 3%.

　　 No, the apple eating apple has issued debts again.

Beijing time on November 11th noon, the securities and Exchange Commission released Apple 2 billion 800 million euros (about 3 billion 500 million U.S. dollars) of euro bond financing information. Divided into a 8 year bond and a 12 year bond, the interest starting date will begin in November 10th, the interest payment date will begin in November 10th next year, and the principal repayment date for the 8 year bonds will be November 10, 2022.

　　 Euro In the doldrums, the cost of issuing bonds is lower. In a recent investor call conference, Apple Corp said that the annual interest rate of 8 year bonds was 1.082%, and the interest rate of 12 year bonds was 1.671%, at the lowest level in history.

　　 Ali Why is it issuing bonds?

The main purpose is to repay syndicated loan. In June 2013, Alibaba completed a $8 billion syndicated loan in overseas markets, with a total of 23 banks involved. It is reported that the financing of the 8 billion US dollars is three parts, that is, the 3 year loan of 2 billion 500 million dollars, the 3 year revolving credit of 1 billion 500 million dollars, and the 5 year loan of 4 billion dollars.

Ali plans to sell 7 kinds of bonds, including 5 fixed rate bonds ranging from 3 years to 20 years, and two floating rate bonds for 3 years and 5 years. Ali's subscription was oversubscribed, but the cost was higher than that of Apple Corp. The 3 year fixed rate bond interest rate was 80 basis points higher than the US Treasury bond. The 5 year fixed rate bond was 110 basis points higher, while the 10 year and 20 year fixed rate bonds were 150 and 175 basis points respectively. The cost of bond financing will be much lower than that of syndicated loans. Alibaba will replace it with cheap money for a high price.

Ali can use self financing and sell short-term investments to raise loan funds. As of September 30, 2014, Alibaba group held cash, cash equivalents and short-term investments totaling 109 billion 911 million yuan.

But it is unwise to do so. Inevitably, high taxes, tight cash flow and falling share prices are not good for credit rating.

Ali has been on the market for two months, and its stock yield has reached 58.8%. In the same period, S & P has only risen 2.5%.

In contrast, Apple Corp has better financial performance and long-term returns to investors.