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

Re:what's this about?

[Anonymous Coward]

From the linked article:

Microsoft, like many peers in the technology industry, holds the vast majority of its cash overseas. Under current laws, it would pay a tax rate of 35 percent to bring back any of the $116.3 billion it holds abroad. With 95 percent of its cash subject to repatriation taxes, it has relied on the debt markets to fund programs like stock buybacks, acquisitions and refinancing deals.

Moody’s Investors Service gave the bonds its top Aaa rating but maintained its negative outlook on Microsoft. It expects the company’s debt may exceed $90 billion this year if it goes back to the market to fund dividends and share buybacks. Microsoft had about $59 billion of long-term debt at the end of last year, filings show.

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

WTF?

Re:Big Fucking Deal

[Penguinisto]

"Companies", as in normal-sized critters, do this all the time. When Megacorps do it, it warrants attention.

In this case, straightforward restructuring of debt makes sense... Microsoft isn't growing like it used to, which only reinforces the need to sell bonds (as opposed to increasing shares of growth stock to cover it, or relying on future market income to wipe out the debt in short order.)

I see it as confirmation that Microsoft's growth is sputtering out, and they know it. Not saying they're dying by any stretch, but more along the lines of Microsoft becoming what IBM has been for a decade now... a maintenance-mode growth curve.