Microsoft Expects to Raise About $25 Billion in First U.S. Bond Sale Since 2017
Key Facts
Microsoft expects to raise about $25 billion from a bond sale in the U.S. market, returning for the first time since its previous issuance in 2017, according to a Reuters report on October 29. Earlier reports had said the company was targeting at least $25 billion, but a later report said it expected proceeds of about that amount. The final size remains subject to change depending on investor demand, and the preliminary offering notice does not specify a final figure. The move comes as the company expands its cloud business and invests heavily in the infrastructure needed for artificial intelligence services. The offering terms also allow net proceeds to be used for general corporate purposes, without tying the funds to a specific project.
The purposes listed in the issuance terms include working capital, capital expenditures, share repurchases, acquisitions and repayment of outstanding debt. The document therefore does not earmark the bond proceeds for data centers or artificial intelligence infrastructure, although expansion in those areas is an important backdrop to the company's financing needs. Microsoft issued unsecured bonds with an aggregate principal amount of $17 billion in January 2017, with the offering scheduled to close on February 6 of that year. That previous issuance provides the time-based benchmark for the company's current return to the U.S. bond market. Coverage of the deal said settlement is scheduled for November 4, 2026.
Results for the quarter ended September 30 reflect the strength of the business underpinning the expansion: revenue was $92.3 billion, up 19% year over year, while operating income rose to $45.9 billion, up 21%, according to an investor relations statement. Microsoft Cloud revenue was about $63.9 billion, up 30%, or 31% in constant currency. Azure revenue also rose 48% year over year. The figures show cloud business growth alongside rising investment commitments, but do not specify how much of the bond proceeds the company will direct toward funding that activity. In the same quarter, commercial remaining performance obligations, or the value of contracts not yet recognized as revenue, rose 73% to $677 billion.
Meanwhile, Microsoft returned $10.2 billion to shareholders in the first quarter of its 2027 fiscal year through dividends and share repurchases. This coincides with offering terms that allow the funds to be used for share repurchases, as well as capital expenditures, debt repayment and other general purposes. The company did not specify in the terms how proceeds would be allocated among these uses. Chief Financial Officer Amy Hood said the company would turn to additional funding sources “when we see that as attractive,” according to Reuters. In a statement reported by The Information, Hood said the company has many options for entering financing markets when it makes sense and is attractive.
Microsoft had forecast on its April earnings call that it would invest about $190 billion in capital expenditures during calendar 2026, including about $25 billion attributable to the impact of higher component prices. On the same call, management said it expected the company to remain capacity-constrained “at least through the end of 2026.” That guidance dates to April and is not a new update issued alongside the October bond sale announcement. The expected spending puts capacity constraints in the context of the expansion the company is seeking to finance, while the offering terms leave use of proceeds general. Microsoft did not specify when it would announce the final size, while coverage indicates settlement is scheduled for November 4.
Reuters reported that Microsoft shares fell about 1.2% in afternoon trading on October 29, after the company gave upbeat cloud sales guidance for the current quarter following its results announcement. The stock move came in the same trading session in which the report discussed expected proceeds from the bond sale, but the source linked the decline to the cloud outlook after the results announcement. The information provided offers no separate explanation for the share move beyond that. In a broader comparison of technology company financing, previous EL7 coverage reported that orders for Alphabet bonds exceeded $115 billion as the company sought to raise $25 billion. Tracking Microsoft's issuance now depends on its final size and scheduled settlement on November 4.