Microsoft Bond Sale Raises $25bn in 10 Tranches

A Microsoft bond sale priced on 29 October will raise $25bn in 10 tranches, with maturities running from November 2028 to November 2066, the company said that day. The deal is made up of senior unsecured notes: two floating-rate tranches of $1bn each and eight fixed-rate tranches with coupons from 4.85% to 6.35%. The sale is expected to close on 4 November.

Much of the coverage has tied the deal to Microsoft’s spending on AI data centres. Microsoft’s own documents make no such link. The release and the preliminary prospectus supplement filed with the SEC say the money is for “general corporate purposes”. AI appears in the release only in its standard description of the company. The AI-spending angle comes from press reports.

In brief

Microsoft has priced $25bn of senior unsecured notes in 10 tranches, from floating-rate notes due 2028 to a 6.35% bond due 2066.
The notes are rated Aaa and AAA and are due to settle on 4 November, the SEC pricing term sheet shows.
The release and prospectus supplement say the proceeds are for general corporate purposes; the AI-spending link comes from press reports.

How the Microsoft bond sale is structured

The Microsoft bond pricing term sheet, filed with the SEC on 30 October, gives a trade date of 29 October and settlement on 4 November. The notes are rated Aaa by Moody’s and AAA by S&P, both with stable outlooks, and will not be listed on an exchange.

The two floating-rate notes were priced at par. The 2028 notes pay compounded SOFR plus 0.35 percentage points and the 2029 notes pay compounded SOFR plus 0.53 points, reset quarterly, with the first payment on 3 February 2027.

The fixed-rate tranches, with their spreads over US Treasuries and yields at issue, are:

$2bn at 4.85%, due 2028: 0.25 points over Treasuries, yielding 4.869%
$3.25bn at 5.00%, due 2029: 0.35 points, 5.036%
$3.25bn at 5.20%, due 2031: 0.45 points, 5.204%
$2.5bn at 5.35%, due 2033: 0.55 points, 5.386%
$4bn at 5.55%, due 2036: 0.65 points, 5.595%
$2bn at 6.15%, due 2046: 0.85 points, 6.183%
$4bn at 6.25%, due 2056: 0.95 points, 6.256%
$2bn at 6.35%, due 2066: 1.05 points, 6.356%

All tranches mature on 3 November of their year. The fixed coupons are paid every six months, from 3 May 2027. J.P. Morgan, UBS and Wells Fargo head a list of 11 joint book-running managers, with 12 co-managers.

Where the money goes, according to the filings

The release and the Microsoft bond prospectus supplement use the same words: the net proceeds “will be used for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of our capital stock, acquisitions and repayment of our existing debt.” Neither ties the notes to AI, data centres or any single project. The release mentions AI once, in its closing company profile, which says Microsoft “creates platforms and tools powered by AI”. The prospectus supplement discusses AI in its business description and risk factors, but not in the use of proceeds.

The press framed the deal differently. CNBC’s headline said Microsoft plans to raise the money “as it pursues AI buildout”. CNBC reported that management is targeting $170bn of capital spending in 2026 and quoted chief financial officer Amy Hood on the 28 October earnings call: “We’re fortunate to have access in the debt markets, given where our ratings are, and we haven’t yet tapped that.” Reuters, citing sources, called it Microsoft’s first US investment-grade bond sale in more than nine years and said orders topped $100bn.

The spending is real. In its first-quarter results, Microsoft reported $39.4bn of additions to property and equipment, about double a year earlier. Amazon and Alphabet also reported heavy spending the same week. PitchBook said hyperscalers have issued $182bn of US senior notes this year.

The prospectus supplement puts Microsoft’s total debt at $35.5bn on 30 September, against stockholders’ equity of $470.5bn. By TSN’s arithmetic, the new notes equal about 70% of that debt, and debt was about 7% of total capitalisation before the sale.

Why the general-purposes wording matters to investors

The gap between the filing and the headlines is a disclosure point. A use-of-proceeds clause written as “general corporate purposes” gives the issuer room. Money raised to repay debt or buy back shares can just as easily free up cash for data centres, and the prospectus does not have to say which. For an investor, the binding description of the Microsoft bond is the one in the filing, not a newspaper’s reading of the company’s strategy.

That matters most for funds with rules on what they hold. A mandate that limits exposure to AI infrastructure, or one that screens bonds by stated purpose, cannot rest on the headlines. It has to rest on the prospectus. The same goes for anyone labelling the deal in research or marketing: calling the Microsoft bond an AI bond is an interpretation, and it needs to be presented as one.

The credit picture explains why the market took the paper so readily. Microsoft carries the top rating from both Moody’s and S&P. The extra yield it pays over Treasuries is thin, from 0.25 points on the shortest fixed tranche to 1.05 points on the 40-year bond. With debt at a small share of its capitalisation, it has plenty of room to borrow more. The political debate over AI spending, including a House resolution against any AI bubble bailout, has not changed how lenders price Microsoft.

Whatever the money ends up funding, Microsoft has now promised to pay 6.35% a year on its 2066 notes until November 2066.