On Thursday, Microsoft announced its plans to issue $25 billion in bonds, capitalizing on its AAA credit rating from S&P to fund its infrastructure expansion. The company is targeting $170 billion in capital expenditures by 2026 to support increasing demand from AI labs like Anthropic and OpenAI.
The net proceeds from the bond offering will be used for various corporate purposes, including working capital, capital expenditures, stock repurchases, acquisitions, and debt repayment. The bond offerings are expected to close on November 4.
This move comes as other tech giants, including Amazon and Alphabet, have also turned to the bond market for infrastructure funding amid rising interest rates, which have made investors cautious about companies with high debt levels.
Microsoft's finance chief, Amy Hood, noted that the company is fortunate to have access to debt markets due to its strong credit ratings and has not yet fully utilized this option. In contrast to competitors like Alphabet and Meta, which reported negative free cash flow, Microsoft reported positive free cash flow, further solidifying its financial stability.
Additionally, Oracle recently announced plans to raise $10 billion in new debt, indicating a broader trend among tech companies seeking to bolster their financial positions in a challenging economic environment