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Business & Market
Microsoft raises $25 billion in first bond sale since 2017
Microsoft has priced a $25 billion senior notes offering in 10 tranches, its first US investment-grade bond sale since 2017, with investor orders of about $115 billion and closing expected on 4 November 2026.
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Microsoft has priced a $25 billion senior notes offering in 10 tranches, its first US investment-grade bond sale since 2017, with investor orders of about $115 billion and closing expected on 4 November 2026.
Special coverage and in-depth reporting from the Business & Market desk.
Key analysis, background details, and full reporting below.
Microsoft has returned to the US investment-grade bond market after more than nine years, pricing a $25 billion offering that drew about $115 billion in orders as investors fund the most expensive phase of the AI buildout.
By StoryTimesNow News Desk — 03 November 2026, 11:04 AM IST
Symbolic illustration of a corporate bond sale. The image is not a photograph of Microsoft offices or staff.
Key Takeaways
What happened: Microsoft priced a $25 billion senior unsecured notes offering on 29 October 2026, split into 10 tranches maturing from 2028 to 2066, with closing expected on 4 November 2026.
Who is affected: Bond investors, Microsoft shareholders and the wider AI infrastructure market, where data-centre spending is now being part-funded with debt rather than cash flow alone.
What next: The sale closes on 4 November 2026, subject to customary conditions, and attention turns to how much of the proceeds Microsoft directs to capital spending in the coming quarters.
Microsoft has priced a $25 billion bond sale, its first US investment-grade offering since 2017, drawing about $115 billion in orders as investors fund the most expensive phase of the AI buildout.
The pricing came a day after Microsoft reported fiscal first-quarter 2027 results on 28 October, and three days after it offered voluntary exit packages to about 60,000 employees. The company has not said the money will go only to AI.
What Happened?
Microsoft priced $25 billion of senior unsecured notes, meaning the bonds are not backed by specific assets. Two tranches are floating-rate notes of $1 billion each, due in 2028 and 2029. The other eight are fixed-rate notes totalling $23 billion, with coupons running from 4.85 per cent on $2 billion of notes due in 2028 to 6.35 per cent on $2 billion due in 2066, according to reports of the pricing terms.
The largest fixed-rate tranches reported were $4 billion due in 2036 at 5.55 per cent and $4 billion due in 2056 at 6.25 per cent. Joint book-running managers were JPMorgan, UBS and Wells Fargo, press reports said. The notes are rated Aaa by Moody's and AAA by S&P, the top credit ratings, which only a handful of companies hold.
Microsoft last sold US investment-grade bonds in 2017, after large offerings in 2016 and 2017 that backed its LinkedIn acquisition, PitchBook noted.
Why Does This Matter?
For Microsoft, the deal funds capacity when spending runs far ahead of even very large cash flows. In the quarter reported on 28 October, revenue was $92.28 billion, up 19 per cent, while capital expenditures including finance leases exceeded $45.2 billion. Press reports put its calendar-2026 capital expenditure target at about $170 billion to $175 billion.
On the earnings call, chief financial officer Amy Hood said the company was fortunate to have access to the debt markets given its ratings and had not yet tapped them. The bond sale is the follow-through: borrowing at top-rated prices while demand is strong.
For the wider market, the oversubscription matters as much as the size. Orders of about $115 billion show investors still lend readily to the strongest AI spenders. PitchBook reported that hyperscalers including Amazon, Alphabet, Meta, Microsoft and Oracle have issued $182 billion of senior notes in US markets this year, up from $93.3 billion last year.
Important Details
Size and structure: $25 billion of senior unsecured notes in 10 tranches; two floating-rate tranches of $1 billion each and eight fixed-rate tranches totalling $23 billion.
Coupons: Fixed rates from 4.85 per cent (2028) to 6.35 per cent (2066); reported 5.20 per cent for five-year notes, 5.55 per cent for 10-year notes and 6.25 per cent for 30-year notes.
Maturities: From 2028 to 2066, spreading repayment across nearly four decades.
Demand: About $115 billion in orders, about 4.6 times the amount offered, according to people familiar with the deal.
Ratings: Aaa from Moody's and AAA from S&P, both with stable outlooks, according to the pricing term sheet reported by trade outlets.
Managers: JPMorgan, UBS and Wells Fargo among the joint book-running managers.
Closing: Expected on 4 November 2026, subject to customary conditions; the notes will not be listed on an exchange, according to the term sheet summary.
Stated use: General corporate purposes, which may include working capital, capital expenditures, share buybacks, acquisitions and repayment of existing debt.
Background and Context
Microsoft is not alone in turning to debt for AI infrastructure. Google raised $25 billion in August 2026, and the hyperscaler borrowing wave this year is already far larger than in 2024 or 2025, because AI models and cloud demand require data centres, chips and power at a scale quarterly cash flow alone struggles to fund.
The employee context is separate. Microsoft offered voluntary exit packages to about 60,000 employees at level 70 and below in participating teams, announced on 26 October 2026. No earmarking for exit costs has been disclosed in the offering documents, which describe general corporate purposes.
What Happens Next?
The immediate next step is closing on 4 November 2026, followed by Microsoft's Ignite event from 17 to 20 November, where it is expected to detail AI and cloud plans.
The longer-term question is whether AI revenue grows fast enough to service debt stretching to 2066. The longest bonds lock in a 6.35 per cent coupon for 40 years; if AI demand slows, Microsoft still owes the coupons, and if it accelerates, the early borrowing will look cheap.
FAQs
Why is Microsoft borrowing if it is profitable? Because capital spending exceeded $45.2 billion in the latest quarter including finance leases, large even against $92.28 billion of revenue. Debt at AAA-rated prices funds data centres without relying on cash flow alone.
Will all $25 billion go to AI? Not as stated. The documents say general corporate purposes, including capital expenditures, working capital, buybacks, acquisitions and debt repayment. The AI link comes from the company's spending plans, not an earmark.
Sources and Verification
Microsoft Source, Microsoft announces debt offerings, 29 October 2026.
Microsoft pricing term sheet, SEC EDGAR, 30 October 2026.
Bloomberg, via The Economic Times, 3 November 2026.
PitchBook, 30 October 2026, reporting the pricing, prior 2016 and 2017 offerings, hyperscaler issuance totals and early trading levels.
