Microsoft taps the bond market for $25 billion, its first offering since 2017, to fund its AI build-out
The AAA-rated company borrowed at a cost barely above the US government’s, even as investors grow pickier about the debt financing the AI boom.
Microsoft raised $25 billion in its first bond offering since 20173.
The company had planned to raise up to $25 billion in the bond market as it pursues its AI build-out1,2.
The 10-year portion of the deal cost just 5.6%, barely more than the US government pays to borrow3.
That pricing reflects the benefit of the company’s protected AAA credit rating3.
The sale follows quarterly results in which Microsoft reported $45.2 billion of capital expenditure and finance leases, up about 30% from a year earlier4.
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Why it matters to investors
The deal shows one of the largest technology companies choosing to borrow to fund the AI build-out1,5.
Technology companies have increasingly turned to debt to help finance one of the biggest US infrastructure projects in history2.
Cloud provider CoreWeave has also relied on the debt market to broaden its data center footprint1.
Investors have become more skittish about companies with tall debt loads, and the bond market has grown pickier about the AI debt binge1,2.
Microsoft’s top credit rating lets it borrow on terms close to those of the US government3.
Neocloud stocks fell after Microsoft revised its capital expenditure down, even though the quarterly figure was up about 30% from a year earlier4.
The drop in those shares tied the fortunes of smaller AI cloud companies to the spending plans of the largest buyers of computing capacity4.
What to watch
The pricing of the $25 billion deal sets a reference point for other technology companies weighing bond sales to fund AI spending2,3.
Investors will watch whether lower-rated borrowers, such as neocloud operators, can raise debt on acceptable terms as appetite for heavily indebted companies cools1,4.
Microsoft’s next capital expenditure figures will show whether its revised spending path holds, after the latest quarter’s $45.2 billion outlay4.
The gap between the 5.6% cost of Microsoft’s 10-year debt and what government borrowing costs is a measure of how much the market values its AAA rating3.
Further large bond deals from technology companies would add to the supply of AI-linked debt that investors are already scrutinising more closely1,2.
Sources
- Microsoft plans to raise $25 billion in debt as it pursues AI buildout - CNBC, cnbc.com (2026-10-30)
- Microsoft to raise up to $25 billion in bond market as investors get pickier about AI debt binge, morningstar.com (2026-10-30)
- Microsoft reaps the benefits of protecting its AAA credit rating, semafor.com (2026-10-30)
- Neocloud stocks drop after Microsoft revises capex down - CNBC, cnbc.com (2026-10-30)
- Microsoft Turns to Bond Market as AI Spending Grows - YouTube, youtube.com (2026-10-29)
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