Microsoft launches $25B bond sale to fund AI expansion
What's the story
Microsoft is planning its first US investment-grade bond sale in over nine years, with an aim to raise about $25 billion. The move comes as part of a broader trend among major tech companies turning to debt markets for funding their artificial intelligence (AI) initiatives. According to Reuters, the bond sale has already attracted more than $100 billion in orders, over four times the offering size.
Investment strategy
Bond sale to have multiple tranches with varying maturities
Microsoft's bond sale will be divided into as many as 10 tranches, with maturities ranging from two to 40 years.
The final size of the offering is yet to be decided and could change depending on demand.
Wells Fargo, JPMorgan Chase, and UBS Group AG are managing this bond offering.
This comes just a day after Microsoft CFO Amy Hood said that the company would seek additional funding sources "when we believe it is attractive to do so."
Market response
Microsoft's AAA rating may ease bond sale
The bond offering is the first from a blue-chip hyperscaler since Alphabet priced $25 billion of debt on August 6.
It will be a major test of the market's appetite for financing AI investments amid concerns over excessive spending and delayed profit payoffs from this technology.
Microsoft's unique position as one of the few publicly traded US firms with top-tier AAA ratings from Moody's Ratings and S&P Global Ratings could help it find ready buyers for its bonds.