Microsoft Sells $25 Billion Of Notes In Ten Series, With Maturities Out To 2066
Coupons climb to 6.350% on the longest bonds, and J.P. Morgan, UBS and Wells Fargo led the underwriters.
Microsoft agreed on October 29 to sell $25 billion of senior unsecured notes in ten series maturing from 2028 to 2066, according to an 8-K filed Wednesday. The sale is set to close Wednesday, November 4, and the longest bonds carry a 6.350% coupon.
Ten series, coupons up to 6.350%
The ten series are two floating-rate and eight fixed-rate notes. The largest are $4 billion of 5.550% notes due 2036 and $4 billion of 6.250% notes due 2056, according to the underwriting agreement. The 6.350% notes due 2066, at $2 billion, are the longest-dated.
Fixed coupons rise with maturity, from 4.850% on $2 billion of notes due 2028 to 6.350% on the 2066 notes. The two floating-rate series, $1 billion each due 2028 and 2029, pay Compounded SOFR (a benchmark overnight borrowing rate) plus 35 and 53 basis points.
J.P. Morgan Securities, UBS Securities and Wells Fargo Securities acted as representatives of the underwriters. The notes rank equally with Microsoft's other unsecured, unsubordinated debt.
Call rights and first payments
Microsoft can redeem the fixed-rate notes early in certain circumstances. The floating-rate notes cannot be redeemed at its option.
Interest on the floating-rate notes is paid quarterly, starting February 3, 2027. Fixed-rate notes pay semi-annually, with the first coupon due May 3, 2027.
Borrowing as AI costs rise
Microsoft, which sells Windows, Microsoft 365, the Azure cloud platform, Xbox and LinkedIn, is raising the money as AI infrastructure spending weighs on its cloud economics. Its annual report, as relayed by Mint, says Microsoft Cloud gross margin fell to 66%, reflecting AI infrastructure investment and growing AI product usage.
The 2066 notes mature on November 3, 2066, and the first fixed-rate coupon is due May 3, 2027.
Sources
- 8-K Filing — MICROSOFT CORP (MSFT) — SEC EDGAR
- Exhibit d178557dex11.htm — MICROSOFT CORP 8-K exhibit — SEC EDGAR
- Microsoft plans $25 billion through bond sale, interest rates go up to 6.35%: What to know | Company Business News — livemint.com
- Microsoft announces debt offerings - Source — news.microsoft.com
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