The Microsoft bond sale was priced on 29 October at $25 billion, the company’s first US investment-grade bond deal in more than nine years, according to Reuters. Microsoft says the deal is expected to close on 4 November 2026.
It puts Microsoft alongside other big tech names that have turned to the debt markets over the past year. Until recently, these companies mostly paid for their spending out of their own large cash piles.
Key points
- $25 billion of senior unsecured notes, split into 10 tranches
- Maturities run from 2028 to 2066, with fixed rates between 4.85% and 6.35%
- First US investment-grade bond sale by Microsoft in more than nine years, Reuters reported, citing sources
- Orders topped $100 billion, more than four times the deal size, one source told Reuters
- The deal is expected to close on 4 November 2026
Inside the Microsoft bond sale
Microsoft announced the pricing in a statement on 29 October. The $25 billion is made up of two floating rate tranches of $1 billion each and eight fixed rate tranches. The longest notes run for 40 years and carry the highest rate, 6.35%.
| Type | Amount | Rate | Due |
|---|---|---|---|
| Floating rate | $1.00bn | Floating | 3 Nov 2028 |
| Floating rate | $1.00bn | Floating | 3 Nov 2029 |
| Fixed rate | $2.00bn | 4.85% | 3 Nov 2028 |
| Fixed rate | $3.25bn | 5.00% | 3 Nov 2029 |
| Fixed rate | $3.25bn | 5.20% | 3 Nov 2031 |
| Fixed rate | $2.50bn | 5.35% | 3 Nov 2033 |
| Fixed rate | $4.00bn | 5.55% | 3 Nov 2036 |
| Fixed rate | $2.00bn | 6.15% | 3 Nov 2046 |
| Fixed rate | $4.00bn | 6.25% | 3 Nov 2056 |
| Fixed rate | $2.00bn | 6.35% | 3 Nov 2066 |
J.P. Morgan, UBS and Wells Fargo head the list of joint book-running managers, alongside Barclays, BNP Paribas, BofA Securities, Citigroup, Goldman Sachs, HSBC, Morgan Stanley and RBC Capital Markets. Earlier on Thursday, Bloomberg was first to report the plan, saying the size could still change with demand.
What Microsoft will do with the money
Microsoft did not tie the money to one project. It said the net proceeds are for general corporate purposes, which may include working capital, capital expenditure, share buybacks, acquisitions and paying down existing debt. CNBC noted that Microsoft holds a top AAA credit rating from S&P.
Even so, the timing comes as the cost of AI keeps rising. Reuters said the largest tech firms have been raising money through bonds and shares over the past year to fund their AI spending. That spending is also changing how these companies run, as our report on Oracle’s shrinking workforce amid AI adoption shows.
Why now
The deal came a day after Microsoft’s quarterly earnings call on Wednesday. There, chief financial officer Amy Hood said the company would look at other sources of funding “when we believe it is attractive to do so”, to protect its cash flow and financial flexibility.
“We’re fortunate to have access in the debt markets, given where our ratings are, and we haven’t yet tapped that.”
Amy Hood, Chief Financial Officer, Microsoft (as quoted by CNBC)
Unlike some rivals, Microsoft is still generating cash. According to Reuters, it expects positive free cash flow for its current fiscal year, which ends in June 2027. Alphabet burned $9.07 billion in the third quarter, and Meta reported its first cash burn in more than a decade, both because of heavy data centre spending. For a look at why those data centres are so costly to run, see our piece on AI power consumption in data centres.
Microsoft shares fell about 1.2% in afternoon trading on Thursday, Reuters reported. The company had given an upbeat cloud sales forecast for the current quarter after the market closed on Wednesday.
What we still do not know
Microsoft has not said how much of the money will go to data centres or AI. The $100 billion order figure comes from a source speaking to Reuters, not from the company.
Main image: Microsoft office in Cologne, Germany. Photo: © Raimond Spekking / CC BY-SA 4.0 (via Wikimedia Commons)
Sources: Microsoft, Khaleej Times (Reuters), CNBC
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