Apple opportunistically issues debt for safety
The hosts and guest discussed research showing that Apple strategically times its bond issuance to exploit periods of high market demand for safe assets.
The argument
When investors are willing to overpay for safety, highly-rated corporate entities like Apple can issue safe debt at premium pricing, effectively capturing cheap funding.
The thesis, stress-tested
✓ What validates it
- ✓Apple increasing debt issuance during periods of heightened global market volatility or flight-to-safety events
▸ Risks discussed
- ▸Macroeconomic shifts could reduce the global demand premium for AAA-rated corporate debt
Hear it yourself
"But on the dead side, we've spoken quite a bit in academia as you know well about this issue of the demand for safety that from time to time the market wants these very safe, very few entities in the world, the US government, but it looks like these very triple a rated companies can do that as well, and they seem to time a little bit…"
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