Apple Assigned “AA-” Credit Rating by Morningstar (AAPL)

On Tuesday I explained why Apple, with roughly $200B in short term and long term investments, borrows money to pay dividends: it is better to pay 5% interest than 30% or so in taxes to repatriate the cash in Caribbean bank accounts back to the U.S.

However, I also mentioned that Apple can’t borrow forever. Bankruptcy risk increases with debt and the borrowing cost (interest rate) will rise also. Then I see this article regarding Apple’s AA- rating. Expect the rating to drift downward if Apple continues to borrow to avoid taxes.

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