Blackstone's Schwarzman: Apple's Decision to Issue Bonds 'Very Smart'

Thursday, 02 May 2013 07:58 AM

By Dan Weil

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Apple's decision to sell $17 billion of bonds, a record for the U.S. corporate bond market, makes a lot of sense, says Blackstone Group CEO Steve Schwarzman.

Apple is borrowing the money to finance share buybacks and dividend payments. Without the bonds, Apple would have to repatriate cash reserves from overseas, which would mean a heavy repatriation tax payment.

"Apple, of course has huge amounts of cash, but by the same token the cost of borrowing now is so unbelievably low that issuing long-term bonds … is actually a very smart thing," Schwarzman told CNBC.

Editor’s Note:
Put the World’s Top Financial Minds to Work for You


"It's a little bold. Apple's a little bold. I think other companies should think about something similar. We did. We issued 30-year bonds — the first financial [company] since the crisis to do that."

Schwarzman also said he doesn't see a bubble in the housing market, despite the industry's recovery. Many people who want to buy homes still can't afford the 20 percent down payment that's often required, he noted.

Blackstone is now the largest owner of individual homes in the United States. "We're renting those houses to people who really can't be in them in other ways. So I expect that housing prices will continue to go up, and it's not really a bubble."

As for Apple, its bond issue drew strong demand Tuesday.

"Apple made its intentions clear that this deal is for shareholder-friendly activity, but they have tremendous metrics and brand recognition," Rajeev Sharma, portfolio manager at First Investors Management, told International Financing Review.

"Apple is something everyone wants in their portfolio."

Editor’s Note: Put the World’s Top Financial Minds to Work for You

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