PitchBook: Microsoft Returns to the Bond Market to Fuel Massive Capital Spending Plans

On Oct. 29, to support its artificial intelligence infrastructure buildout, AAA-rated Microsoft MSFT priced $25 billion of senior notes in 10 parts. This happened on the heels of the firm’s message to investors that 2026’s torrid capital spending pace (including more than $50 billion in the latest quarter and projections for roughly $170 billion for the fiscal year) would only accelerate next year.

Early trades on Oct. 30 were wider, after sentiment-rattling updates from Amazon AMZN and Intel INTC. That’s against low funding spreads for the gilt-edged issuer, however. The new 5.20% five-year issue (priced at T+45), 5.55% 10-year issue (priced at T+65), and 6.25% 30-year issue (priced at T+95) each traded 2-3 bps wide of pricing.

With Microsoft, the average deal size this year held at $2.1 billion, a record. Of the 21 largest deals ever printed ($25 billion-$49 billion), 10 were placed this year. That includes a swath of $25 billion prints (for Microsoft, Amazon, Alphabet, Meta Platforms, Oracle, SpaceX, Nvidia, and Salesforce). Skydance’s $30.0 billion investment-grade print (alongside $12.4 billion in high-yield bonds) was the largest since Amazon printed $37 billion for AI-era liquidity on March 10 (it also inked EUR 14.5 billion of notes overseas that week).

Traditional hyperscalers (Amazon, Alphabet, Meta Platforms, Microsoft, Oracle) have now issued $182.0 billion of senior notes in the US markets this year, up from $93.3 billion last year and from less than $17 billion in 2024. This year’s total for that legacy cohort is alongside big placements for hard-charging SpaceX ($25 billion) and various data center developers.

Outlooks are stable across the AAA/Aaa ratings. Moody’s in August affirmed its grade, arguing that the company is “well positioned to capitalize on AI-driven opportunities through its strategic relationship with OpenAI and its broad portfolio of infrastructure, platform development, and application software offerings.” The agency projects 18%-19% revenue growth over the next couple of years, reaching roughly $466 billion for the fiscal year ending June 2028, “driven by growth in Azure cloud services and Microsoft 365 commercial offerings.”

Microsoft’s previous bond offerings, including placements of $19.75 billion in August 2016 and $17 billion in January 2017, backed its big play for LinkedIn. Its 2017 print included the $4 billion of 3.3% notes coming due in February. That issue was priced as a 10-year issue, at T+85. This week’s print included 5.55% 10-year notes, at T+65.

That 2017 offering also included 4.5% bonds due 2057, priced at T+140. The issue traded this week at 6.07%, or T+74, about 15 bps wider than at the start of October, trade data show. Against that, this week’s offering included 6.25% 2056 bonds at T+95.