Microsoft returns to dollar bond market with $25 billion deal
Microsoft sold $25 billion of senior unsecured notes on October 29, 2026, marking its first dollar-denominated debt offering since 2017, with demand reaching $115 billion, roughly 4.6 times the amount on offer.
The offering was structured across 10 separate maturities, spanning two to 40 years. The longest portion, maturing in 2066, was priced to yield 1.05 percentage points above comparable Treasury bonds, a spread up to 0.3 points narrower than originally indicated, showing that buyers settled for a thinner yield cushion than initially floated.
Microsoft described the use of proceeds broadly as general corporate needs, covering capital spending and stock repurchases, without allocating any portion specifically toward artificial intelligence projects. On the earnings call held October 28, Chief Financial Officer Amy Hood indicated to analysts that the company retains the freedom to access debt markets whenever conditions appear favorable and pricing is appealing.
Ahead of the bond sale, Microsoft’s balance sheet showed $64.5 billion in cash and near-term investments versus $31.1 billion in long-term borrowings. Capital outlays, counting finance leases, totaled $45.2 billion during the fiscal first quarter, and management flagged that the following quarter’s spending would surpass $50 billion. Azure’s revenue climbed 48% on a constant-currency basis, surpassing the firm’s own projected range of 44-45%.
Credit default swaps tied to Microsoft’s five-year debt currently trade around 54 basis points, markedly below the 116 level seen for Meta Platforms and the 275 level for Oracle, indicating that lenders regard Microsoft’s obligations as considerably safer. The 2066 Microsoft note also cleared at a tighter spread than a comparable 40-year Alphabet bond issued in August, which currently changes hands near 1.33 percentage points above Treasuries. Microsoft shares ended the pricing session at $530.14, slipping 0.16%, after an earlier 4.1% after-hours rally from the prior session had already evaporated.
Across the broader sector, cloud computing giants and data-center builders have collectively sold upward of $313 billion in investment-grade bonds worldwide during 2026 to finance the expansion of AI-related infrastructure.
Why it matters for markets: A wave of AI-driven bond issuance from highly rated technology companies adds to overall corporate credit supply and can shift US Treasury yields and spread levels, while spending guidance from major cloud providers such as Microsoft continues to serve as a bellwether for demand across semiconductor, power and data-center supply chains, ultimately feeding into sentiment for broad equity benchmarks like the S&P 500 and Nasdaq 100.
Source: Yahoo Finance