After more than nine years, Microsoft is preparing to re-enter the U.S. corporate bond market with a substantial deal. According to Bloomberg, the company plans to raise at least $25 billion to help finance its large-scale investments related to artificial intelligence.
Key terms reported
Sources cited by Bloomberg said the final size of the issuance has not yet been determined and could vary depending on investor demand. Microsoft may issue debt in up to ten different tranches, with maturities ranging from two years to forty years. For the longest-dated notes maturing in 2066, preliminary pricing guidance indicated a potential spread of about 1.35 percentage points over comparable U.S. Treasuries.
Wells Fargo, JPMorgan Chase and UBS have been appointed to arrange the transaction. Proceeds from the sale will be used for general corporate purposes, including capital expenditures.
Why this matters
The planned offering ends a lengthy pause in Microsoft’s debt issuance: the company last issued similar high-grade bonds in 2017, raising $17 billion at that time. Microsoft is one of the few publicly listed U.S. firms — alongside Johnson & Johnson — to hold the top AAA ratings from both Moody’s and S&P.
The size and timing of the deal are seen as an important gauge of investor appetite, given growing market concerns about the sustainability of heavy AI-related spending across the technology sector. Alphabet, Google’s parent company, executed a comparable transaction on August 6 when it issued $25 billion of bonds.
Communications
Neither Microsoft nor the banks handling the transaction commented on the report.
