Microsoft Corp. priced $25 billion of senior unsecured bonds, tapping the corporate debt market at scale for the first time in its artificial-intelligence buildout and joining Amazon, Alphabet and Oracle in borrowing to pay for data centers.
The offering came in 10 pieces. Two floating-rate tranches of $1 billion each mature in 2028 and 2029. The fixed-rate notes run from $2 billion of 4.85% notes due 2028 to $2 billion of 6.35% notes due 2066, with the biggest slices being $4 billion of 5.55% notes due 2036 and $4 billion of 6.25% notes due 2056. Demand reportedly topped $100 billion, roughly four times the amount sold. The deal is expected to close on Nov. 4.
A AAA borrower steps in
Microsoft is one of only two U.S. companies with a top AAA credit rating, which lets it borrow at rates close to those paid by the federal government. Finance chief Amy Hood told analysts a day earlier that the company had used leasing to fund part of its expansion but had not yet drawn on the bond market. Microsoft is targeting about $170 billion of capital spending in 2026 to meet demand from AI developers including OpenAI and Anthropic and from its own cloud customers.
The company said the proceeds are for general corporate purposes, which may include working capital, capital expenditures, share repurchases, acquisitions and repaying debt. J.P. Morgan, UBS and Wells Fargo led a syndicate of a dozen book-running banks.
Cash flow sets it apart
Unlike several of its rivals, Microsoft reported positive free cash flow for its latest quarter. Alphabet, Meta and Amazon have each reported negative free cash flow as spending on chips and buildings outpaces operating income, and Oracle disclosed plans this week to raise $10 billion of new debt. Bond investors have grown more selective about lending to the most heavily indebted AI builders, but the order book for Microsoft suggested ample appetite for top-rated paper with long maturities.
