A huge order book - and how pricing landed
Microsoft's latest trip to the bond market pulled in $115 billion at the top, a multiple of 4.6 on a $25 billion sale that ranks among the most heavily subscribed US corporate deals on record, based on Bloomberg data. For a company that has not tapped US investment grade markets in years, the reception was emphatic.
The offering came in up to 10 slices with maturities from two to 40 years, and included a security maturing in 2066. Pricing on that longest bond narrowed by up to 0.3 percentage points from the initial indication to end at 1.05 percentage points over Treasuries. For context, Alphabet's 40 year paper - which carries lower ratings - has traded around a spread near 1.33 percentage points, according to Trace data.
Wells Fargo, JPMorgan and UBS led the transaction. People familiar with the financing said the cash will go toward general corporate uses, including capital expenditures. Microsoft and the banks either declined to comment or did not immediately respond.
Why this deal, and why now
Microsoft hasn't done a large bond deal in nearly ten years, and its most recent prior issue was in 2017, when it raised $17 billion. Bloomberg's rankings show Microsoft's return ties Alphabet for the sixth largest order book, and it is the first blue chip hyperscaler sale since Alphabet priced $25 billion of bonds on Aug. 6. That makes it a clean read on investor appetite to bankroll artificial intelligence build outs as questions build about spending levels and when the profits arrive.
Demand has not been a straight line. Buyers who jumped in early have at times stepped back and asked for more yield, and the rise in benchmark rates has pushed borrowing costs higher. As Brett Kozlowski of GW&K Investment Management put it, "The timing of this deal feels opportunistic," citing the "uniqueness of very rare long AAA paper" likely yielding more than 6%. "This combination likely highlights the market's demand for some diversification in names even as massive supply creates challenges," he said.
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The credit backdrop
Microsoft and Johnson & Johnson are the only publicly traded US names still carrying AAA ratings from both Moody's and S&P, a rarity that adds to the bond's appeal. The broader backdrop is an AI borrowing wave. Hyperscalers and data center developers have issued more than $313 billion in investment grade bonds globally this year, nearly triple the total issued in all of 2025, according to Bloomberg. That surge has helped push global bond issuance to a record $6.61 trillion so far this year, with two months left.
Risk pricing reflects some caution. Among hyperscalers, those with comparatively softer credit profiles have seen the biggest widening in credit default swaps. Five year CDS on Meta Platforms, rated AA, sat around 116 basis points on Thursday, per ICE Data Services.
Microsoft's comparable protection was about 54 basis points. Oracle, often seen as a bellwether for AI debt risk and carrying the weakest rating among the largest hyperscalers, traded near 275 basis points, about 221 wider than Microsoft.
The investor lens
Microsoft reported robust fiscal first quarter numbers on Wednesday, including a 48% jump in cloud revenue and restrained capital expenditures, easing anxiety about AI spending. On the call, Chief Financial Officer Amy Hood said the company plans to raise funds "when we believe it is attractive to do so."
Why does that matter? For your portfolio, this deal offers a clear read on demand for long dated, top tier tech credit, where spreads settled on a 2066 maturity, and how much extra compensation investors are asking for as rates reset higher. It also slots into a year where AI related issuance is reshaping bond markets, and where the cost of credit insurance is drawing sharper lines between balance sheets.
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