Microsoft issues 40-year bond for the first time in its history

Chris Papadopoullos
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MICROSOFT launched $10.75bn (£7.05bn) in new bond offerings yesterday.

Of that sale, $2.25bn was raised by the issuance of 40-year bonds – loans to Microsoft that do not have to be repaid for 40 years.

It is the first time the company has sold bonds with a maturity as long as 40 years.

Reports suggest that the offering was initially worth $7bn but was later raised to $10.75bn due to high investor demand.

Microsoft’s currently has a AAA credit rating, allowing it to take advantage of lower rates on its borrowing. The bond sale takes it past Apple’s own $6.5bn bond issuance last week. Apple has a slightly lower credit rating than Microsoft. Microsoft’s 10-year bond has an interest rate 0.75 per cent higher than the US government’s 10-year debt. This compares to Apple’s 10-year borrowing costs that are 0.85 per cent above the US government’s 10-year bonds.

Microsoft said it would use revenue from the bond sale for general corporate purposes, which could include stock buybacks, capital expenditures and repaying existing debt.