Amy Hood, Microsoft’s chief financial officer, told the company’s earnings call on Wednesday that it would seek additional capital “when we believe it is attractive to do so”. Hood said Microsoft had also used leasing as a financing vehicle and could access debt markets because of its ratings.
On Thursday, Microsoft began its first sale of US investment-grade bonds since 2017, seeking to raise at least $25 billion. Its preliminary prospectus supplement was dated Thursday, and the offerings were scheduled to close on 4 November.
The return follows a long absence from the high-grade debt market. Microsoft last raised such debt in 2017, when it sold $17 billion.
Its capital needs have grown with its cloud business. Azure revenue rose 48% in Microsoft’s fiscal first quarter, while management is targeting $170 billion in 2026 capital expenditures to serve heavy demand from artificial intelligence labs Anthropic and OpenAI, along with other clients.
Microsoft reported positive free cash flow on Wednesday.
The sale comprises 10 series of notes, including two floating-rate series and eight fixed-rate series. The maturities run from two to 40 years.
J.P. Morgan, UBS Investment Bank and Wells Fargo Securities are the joint book-running managers.
The longest note matures in 2066. Initial price talk put its spread at up to 1.35 percentage points above Treasuries.
Microsoft holds AAA ratings from Moody’s Ratings and S&P Global Ratings. Its total debt was $35.481 billion as of 30 September. The new notes are senior unsecured obligations, ranking equally with the company’s other unsecured and unsubordinated debt.
Microsoft said it may use the net proceeds for general corporate purposes, including working capital, capital expenditures, repurchases of its capital stock, acquisitions and repayment of existing debt.
Borrowing has become a regular feature of the industry’s infrastructure push. Investment-grade bond sales by hyperscalers and data centre developers around the world have totalled more than $313 billion so far this year.
Alphabet sold $25 billion in bonds on 6 August, while its cash flow was negative for the second quarter in a row. Meta said it had negative free cash flow, and Amazon reported negative free cash flow on Thursday. Oracle has unveiled plans to raise $10 billion in new debt.
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