Microsoft Sells $17 Billion in Second Bond Deal in Six Months (bloomberg.com)

An anonymous reader shares a Bloomberg report: Microsoft found ample demand for its $17 billion bond offering, allowing it to cut borrowing rates on its second multibillion note offering in six months. The tech giant received at least twice as many orders as it had bonds to sell, according to people familiar with the matter. The longest portion of the offering, which generally refinanced debt maturing soon, was a $2 billion, 40-year bond with a 4.5 percent coupon that yields 1.4 percentage points above Treasuries, according to data compiled by Bloomberg. That's down from initial discussions of about 1.55 percentage points. Moody's Investors Service said Microsoft will use proceeds to refinance commercial paper it sold to help support its takeover of LinkedIn. A regulatory filing shows that at the end of 2016, the Redmond, Washington-based company had $25.1 billion of the debt.

Comments

$90B in cash PLUS $50B in taxes

[raymorris]

> So, Microsoft is going to go $90 Billion in debt just so it can avoid paying $38 Billion in taxes.

To pay the costs in cash, they need to use $140B. They bring $140B to the US, pay $50 billion in taxes, and have $90 billion left to pay the expense. If that $140B is earning them 6% overseas, that's $8.4 billion in lost income each year, plus losing the liquidity of having cash.

By borrowing, they pay $2 billion in interest and still have their cash for 40 more years.

Bottom line:
Since it costs $50 billion in taxes to bring the money to the US, it's much cheaper to leave the money elsewhere and use debt in the US.