Microsoft Seeks at Least $25 Billion in Its First US Bond Sale Since 2017
The AAA-rated company is borrowing as spending on AI data centers rises, with up to 10 tranches running from two to 40 years.
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Microsoft is seeking to raise at least $25 billion through its first US investment-grade bond sale since 2017, Bloomberg reported on October 29, 2026. The money will go to general corporate purposes, including capital spending, as the company pours money into AI data centers. The final size had not been set at the time of reporting and may change with investor demand.
Image: Roberto Júnior (Unsplash) / CC0 1.0, via Wikimedia Commons
The terms so far
According to Bloomberg and Microsoft's preliminary prospectus supplement, the offering has these features:
- Up to 10 tranches: eight fixed-rate and two floating-rate, with the floating notes priced off compounded SOFR
- Maturities from two to 40 years, with the longest notes due in 2066
- Senior unsecured notes, not listed on any exchange
- Expected ratings of Aaa/AAA, with settlement scheduled for November 4
- JPMorgan, UBS and Wells Fargo as managers
Initial price talk for the 40-year bond was as much as 1.35 percentage points over Treasuries, Bloomberg reported. That is roughly in line with where Alphabet's and Amazon's 40-year bonds trade, even though those companies have lower credit ratings.
The prospectus says the proceeds may go to working capital, capital expenditures, share buybacks, acquisitions and repaying existing debt. Microsoft listed total debt of $35.481 billion as of September 30.
Why Microsoft is borrowing now
Microsoft last sold high-grade bonds in 2017, when it raised $17 billion. It is one of only two US public companies with AAA ratings from both Moody's and S&P, along with Johnson & Johnson, and has long paid for growth from its own cash.
The cost of AI infrastructure is changing that. Microsoft reported its fiscal first-quarter results on October 28, 2026:
| Metric (quarter to Sept. 30) | Figure |
|---|---|
| Spending on data centers and equipment, including leases | $45.2 billion |
| Free cash flow | $18.6 billion, down 27% |
| Azure revenue | $33.2 billion, up 48% |
| Azure growth guidance, current quarter | 49% to 50% |
"We still have demand that exceeds supply," Chief Financial Officer Amy Hood told analysts. On the call, she said Microsoft would raise additional funds "when we believe it is attractive to do so." The bond sale surfaced the next day.
Part of a wider borrowing wave
Microsoft is the first blue-chip hyperscaler to come to market since Alphabet priced $25 billion of debt on August 6. Amazon also announced plans for a $25 billion bond sale in July.
Hyperscalers and data center developers have raised more than $313 billion through investment-grade bond sales globally this year, almost three times the full-year 2025 total, according to Bloomberg data.
That volume has made some investors cautious. Bloomberg reported that buyers who rushed into AI-linked debt have at times pulled back and demanded higher yields, and that concern is showing up in the market for credit default swaps.
Why it matters
Bloomberg called the deal a key test of investor appetite for financing AI. If one of the world's strongest credits can borrow cheaply at this scale, more AI-linked debt is likely to follow. Weak demand or wide pricing would signal that bond buyers want more proof that AI spending will pay off.
Borrowing does not mean Microsoft is short of cash; it still generated $18.6 billion of free cash flow last quarter. It does mean the AI buildout has grown large enough that even Microsoft is spreading the cost over decades.
Watch the final deal size, the spread on the 2066 bond and the order book once the deal prices. Those three numbers will show how credit markets are judging the next phase of AI spending.
More coverage of AI infrastructure is in our Artificial Intelligence hub.
How we reported this
We checked the deal terms against Bloomberg reporting, as carried by Investing.com and Moneycontrol, and against Quartz's reading of Microsoft's preliminary prospectus. Earnings figures come from The Next Web's report on Microsoft's results. At the time of writing the deal had not priced, so we did not report a final size.
Sources
- Investing.com: Microsoft seeks at least $25 billion in first bond sale since 2017, Oct 29, 2026.
- Moneycontrol (Bloomberg): Microsoft eyes at least $25 billion in first US bond since 2017, Oct 29, 2026.
- Quartz: Microsoft is raising at least $25 billion in its first U.S. bond sale, Oct 29, 2026.
- The Next Web: Microsoft sells at least $25bn of bonds, its first US deal since 2017, Oct 29, 2026.
- Reuters: Amazon aims to raise $25 billion from bond sale, Jul 7, 2026.
DailyMech used AI tools to help research and draft this article; it was fact-checked by our editors.