Highlights
- Microsoft raises £19bn through its first major US bond issue in nine years.
- Investor orders reach about £87bn, more than four times the amount sought.
- Company expects to spend around £133bn on capital expenditure in 2026.
- Bond sale comes days after it offered voluntary exit packages to about 60,000 employees across four countries.
MICROSOFT has raised £19 billion through a major bond sale to finance its expanding artificial intelligence (AI) and cloud computing infrastructure, underlining the growing cost of competing in the global AI race.
The offering, last week, attracted investor orders worth about £87 billion, around 4.6 times the amount the technology company intended to raise, according to reports.
It is Microsoft's first US investment-grade bond sale since 2017, when it raised £13bn. The latest transaction is scheduled to close on Wednesday (4).
The fundraising comes as Microsoft steps up investment in data centres, servers and computing capacity to meet growing demand for its AI products and cloud services. The company expects capital expenditure of around £133bn in 2026.
Proceeds from the bond sale will be used for general corporate purposes, including capital expenditure. Microsoft has said the funds could also support working capital, share repurchases, acquisitions and repayment of existing debt.
Turning to the debt market
The company structured the offering into 10 tranches, with maturities ranging from 2028 to 2066. Fixed interest rates range from 4.85 per cent on the shorter-term notes to 6.35 per cent on those maturing in 2066. Two floating-rate tranches of £760 million each were also included.
It holds the top AAA rating from both Moody's and S&P, making it one of only two publicly listed US companies with that rating, alongside Johnson & Johnson.
Chief Financial Officer Amy Hood had previously indicated that Microsoft could turn to debt markets when borrowing conditions were favourable, while maintaining financial flexibility.
"There’s a form of financing called leasing, and we’ve been using that one as a vehicle," Hood said, adding that Microsoft was fortunate to have access to debt markets because of its credit ratings but had not previously tapped them.
The bond issue comes amid a wider expansion in borrowing by technology companies and data centre developers seeking to finance AI infrastructure. Hyperscalers, which operate large cloud computing networks, and data centre developers have raised more than £238bn through investment-grade bonds worldwide this year, nearly three times the total for 2025.
Alphabet raised about £19bn through a bond sale in August, while Meta secured a similar amount through an equity offering.
Microsoft future plans
Microsoft's spending plans reflect the rapid growth of its cloud and AI businesses. Its latest quarterly revenue increased by 19 per cent, while operating income rose by 21 per cent. Azure, its cloud computing platform, recorded growth of 48 per cent.
Hood said demand for Azure continued to exceed the computing capacity the company could supply, with engineering teams working to expand infrastructure.
The fundraising also comes days after Microsoft announced a voluntary exit programme for about 60,000 employees in the US, UK, India and Canada.
Announced on October 26, the scheme covers eligible employees at level 70 and below in participating teams, including AI experiences, Copilot, finance, human resources, Xbox, and Windows and Devices. Marketing, commercial business and security employees are excluded.
With a global workforce of about 223,000, the programme covers more than a quarter of its employees. Microsoft is expected to provide further details of its AI and cloud strategy at its Ignite conference, scheduled for November 17-20.
