Microsoft looks to raise at least US$25 billion from US bond sale

MICROSOFT is looking to raise at least US$25 billion from its first US investment-grade bond sale in more than nine years, joining rivals in a borrowing spree to fund the artificial intelligence investment boom.

No final decision has been made on the offering’s size, which may change according to demand, said people familiar with the matter.

The world’s largest software company is selling the debt in as many as 10 tranches, with maturities ranging from two to 40 years, the people said, asking not to be identified because they are not allowed to speak publicly.

Initial price talk on the longest maturity, a note due in 2066, is a premium of as much as 1.35 percentage points above US Treasuries, the person added.

Wells Fargo, JPMorgan Chase and UBS are managing the bond offering. Proceeds from the sale will be used for general corporate purposes including capital expenditures, the person said.

The deal ends a long issuance dry spell for Microsoft.

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The company – one of only two publicly traded US companies with top-tier AAA ratings from Moody’s Ratings and S&P Global Ratings alongside Johnson & Johnson – last sold high-grade debt in 2017, when it raised US$17 billion, going by data compiled by Bloomberg.

The offering – the first from a blue-chip hyperscaler since Alphabet priced US$25 billion of debt on Aug 6 – will be a crucial test of investor appetite for financing AI investments as concerns grow about the sustainability of the industry’s spending spree.

Microsoft and the banks either declined to comment or did not immediately respond to queries. BLOOMBERG