Microsoft to Issue 33 Trillion Won in Bonds to Expand AI Investment

Microsoft is moving to issue $25 billion in corporate bonds (approximately 33.5 trillion won) as it prepares to expand investment in artificial intelligence (AI) infrastructure. This is the first time Microsoft has raised funds in the U.S. investment-grade corporate bond market since 2017, nine years ago.

Reuters-Yonhap

According to Bloomberg News on Oct. 29 local time, Microsoft will issue 10 tranches of corporate bonds with maturities ranging from two to 40 years. At one point, the bonds drew approximately $115 billion in orders, 4.6 times the planned issuance size.

Microsoft holds the highest credit rating, AAA, from both Moody's and S&P Global. Among U.S.-listed companies, only Microsoft and Johnson & Johnson hold the highest rating from both agencies. Microsoft raised $17 billion through a bond issuance in 2017.

Wells Fargo, JPMorgan Chase and UBS Group are managing the bond issuance. The proceeds will be used for general corporate purposes, including capital expenditures.

Microsoft's bond issuance comes as global Big Tech companies increase borrowing to secure funds for investments needed to build AI data centers and other infrastructure. According to Bloomberg News, investment-grade corporate bond issuance by large data center operators and developers worldwide has exceeded $313 billion so far this year. That is about three times the total issued throughout last year.

Concerns have also emerged about the financial burden on companies from increased AI investment. Five-year credit default swap (CDS) premiums, which indicate the risk of corporate default, stood at approximately 116 basis points for Meta and 275 basis points for Oracle (1 basis point = 0.01 percentage point). Microsoft, by contrast, remained relatively low at approximately 54 basis points.

In results announced on Oct. 28, Microsoft reported a surplus of $18.6 billion in free cash flow (FCF) for the first quarter of fiscal 2027 (July-September), even as it expanded investment in AI infrastructure. At the time of the earnings announcement, Microsoft Chief Financial Officer Amy Hood said the company could seek additional funding if favorable conditions arose, in order to maintain financial flexibility.

This content was produced with the assistance of AI translation services.