Microsoft is raising at least $25 billion in bonds, its first U.S. sale since 2017
Microsoft is raising at least $25 billion in bonds, its first U.S. sale since 2017
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The offering is split into 10 series of notes, and Microsoft's filing says proceeds will go to general corporate purposes
David Paul Morris/Bloomberg via Getty Images
Microsoft $MSFT is aiming to bring in a minimum of $25 billion through its first sale of investment-grade U.S. bonds since 2017, according to Bloomberg. No final decision on the size has been reached, and investor demand could alter it, according to Bloomberg.
In a preliminary prospectus supplement dated Thursday, Microsoft outlined an offering of notes in 10 series, two with floating rates and eight with fixed rates. The document leaves principal amounts, interest rates and maturity dates blank. The floating-rate notes will pay interest at Compounded SOFR plus a spread.
The notes will be senior unsecured obligations and will rank equally with Microsoft's other unsecured and unsubordinated debt, the filing says. J.P. Morgan, UBS Investment Bank and Wells Fargo $WFC Securities are the joint book-running managers. The notes will not be listed on any securities exchange.
Microsoft said net proceeds will go toward general corporate purposes, which may include working capital, capital expenditures, repurchases of its capital stock, acquisitions and repayment of existing debt. The filing lists total debt of $35.481 billion as of Sept. 30.
Maturities range from two to 40 years, according to Bloomberg. Initial price talk for the longest note, which matures in 2066, points to a spread of up to 1.35 percentage points above Treasuries, according to Bloomberg.
Microsoft holds AAA ratings from Moody's $MCO Ratings and S&P Global $SPGI Ratings, according to Bloomberg. Its most recent sale of high-grade debt was in 2017, when it raised $17 billion, according to Bloomberg.
Microsoft reported on Wednesday that Azure revenue rose 48% in its fiscal first quarter. Chief Financial Officer Amy Hood said on the earnings call that Microsoft would seek more capital “when we believe it is attractive to do so,” according to Bloomberg.
Alphabet $GOOGL sold $25 billion in bonds on Aug. 6, the latest offering from a highly rated hyperscaler ahead of Microsoft's, according to Bloomberg. Investment-grade bond sales by hyperscalers and data center developers around the world have totaled more than $313 billion so far this year, according to data compiled by Bloomberg.
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