Microsoft (MSFT.US) announced on Thursday that it plans to issue $25 billion in bonds, leveraging its high-quality credit rating to raise funds for infrastructure expansion, according to a report.
The software giant holds the highest AAA credit rating from S&P. Management plans capital expenditure of $170 billion in 2026 to meet surging computing demand from AI labs such as Anthropic and OpenAI, as well as other customers.
According to a statement, Microsoft will issue $25 billion in aggregate principal amount of senior unsecured notes, split into floating-rate and fixed-rate tranches. "Microsoft intends to use the net proceeds from this offering for general corporate purposes, which may include funding working capital, capital expenditures, share repurchases, acquisitions and repayment of existing debt," the company said. The offering is expected to close on November 4.
Amazon (AMZN.US) and Alphabet (GOOGL.US) have already entered the bond market this year to finance infrastructure projects, and AI cloud-focused CoreWeave (CRWV.US) has also used the debt market to expand its data center footprint. Microsoft's last high-grade bond issuance dates back to 2017, when it raised $17 billion. But as central banks raised interest rates to combat inflation, investor risk appetite for highly indebted companies has continued to decline.
Microsoft CFO Amy Hood said on the company's earnings call on Wednesday that Microsoft will secure additional funding sources when conditions are attractive to supplement its own cash flow generation. "Leasing is also a financing tool we are using," she said. "Given our rating advantage, we have room to raise funds in the bond market, and we have not yet tapped that capacity."
Microsoft reported positive free cash flow on Wednesday, contrasting sharply with Alphabet, whose cash flow has been negative for a second consecutive quarter. Last week Meta (META.US) disclosed negative free cash flow, and Amazon also reported negative free cash flow on Thursday. Also on Wednesday, Oracle (ORCL.US) announced plans to issue $10 billion in new bonds and said it expects to return to positive free cash flow in the second half of fiscal 2028.
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