Microsoft plans $25 billion through bond sale, interest rates go up to 6.35%: What to know
Microsoft is planning to raise $25,000,000,000 through a bond sale. In a prospectus supplement filed with the US Securities and Exchange Commission (SEC) on 2 November, Microsoft detailed the terms of the bond offering, including the amount it plans to raise across different maturities, interest rates and how it intends to use the proceeds.
The company priced the bond offering on 29 October, with the transaction expected to close on 4 November.
Reportedly, Microsoft last sold its high-grade debt in 2017, raising 17 billion. It’s also the only publicly traded US firm besides Johnson & Johnson with top-tier AAA ratings from Moody’s Ratings and S&P Global Ratings, according to Bloomberg.
The timing is hard to miss. It may be recalled, days ago Microsoft extended voluntary exit offers to 60,000 employees across 4 countries including India. The buyout offer was much similar to a standard severance arrangement, including one month's base salary for every completed year of service, along with health insurance and career transition services.
Simply put, the tech giant is borrowing $25 billion from investors by issuing bonds. Investors will lend Microsoft money and, in return, earn interest on it. These bonds have maturities ranging from 2028 to 2066. Microsoft is issuing 10 tranches of bonds with different interest and maturity dates. Of this $25 billion, the company plans to raise $6 billion through the floating-rate bonds and $19 billion through fixed-rate bonds. The longest-maturity bonds will be repaid in 2066, giving Microsoft a 40-year borrowing horizon. Here's a look:
| Maturity | Amount | Interest |
|---|---|---|
| 2028 | $1,000,000,000 | Floating |
| 2028 | $2,000,000,000 | 4.85% |
| 2029 | $1,000,000,000 | Floating |
| 2029 | $3,250,000,000 | 5% |
| 2031 | $3,250,000,000 | 5.2% |
| 2033 | $2,500,000,000 | 5.35% |
| 2036 | $4,000,000,000 | 5.55% |
| 2046 | $2,000,000,000 | 6.15% |
| 2056 | $4,000,000,000 | 6.25% |
| 2066 | $2,000,000,000 | 6.35% |
The company says it intends to use the net proceeds from the offering for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions, and repayment of existing debt.
The company has not explicitly allocated any portion of the $25 billion for artificial intelligence (AI) investments or data centre expansion. However, the regulatory filing notes that AI and cloud infrastructure remain important investment priorities for Microsoft. In the prospectus, the company identifies building global-scale cloud and AI infrastructure as part of its long-term business ambitions.
It's also worth mentioning that while company's revenue increased 18% its cost of revenue rose 21%, driven by growth in Microsoft Cloud. The gross margin percentage of Microsoft Cloud declined to 66%, reflecting continued investments in AI infrastructure and growing usage of AI products. The company's annual report also showed that operating expenses increased by $4.9 billion, or 7%, driven by continued investments in research and development, computing capacity, AI talent and data centres.
A key disclosure in the filing reveals that bond sale may potentially increase the company's debt by over 70% or $24.87 billion. The regulatory filing reveals Microsoft's capital structure as of 30 September 2026 and how it would look after the proposed $25 billion bond sale. The calculation includes the new debt but does not account for how the company will spend the money raised.
| Actual As of 30 Sep 2026 | As Adjusted | |
|---|---|---|
| Total Debt | $35.481 billion | $60.358 billion |
| Total Stockholders' Equity | $470.509 billion | $470.509 billion |
| Total Capitalization | $505.990 billion | $530.867 billion |
Devansh Sharma is Deputy Editor at Mint (Digital), where he leads newsroom operations and helps shape the website's editorial strategy. With nearly 15 years of experience in business journalism, he specialises in business, personal finance, stock markets, mutual funds, and economic developments, while also covering geopolitics and major breaking news. During his tenure at Mint, which spans nearly two years, he has led planning and coverage of key news events, including the Union Budget, RBI monetary policy announcements, US Federal Reserve decisions, elections, and major international developments.<br><br> Devansh holds a Master's degree in Journalism & Mass Communication from the School of Communication Studies, Panjab University. Before rejoining Mint, he worked with leading business news organisations, including The Economic Times, Moneycontrol, and ET Money. At ET Money, he served as Senior Investor Educator, where he created educational content to help readers better understand investing, mutual funds, and personal finance. Throughout his career, he has focused on making complex business and financial developments accurate, accessible, and relevant for a broad audience.
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