Microsoft is selling about $2.67 billion of bonds in four parts in the U.S. and Europe.
The company announced Thursday the prices of the debt offerings, which consist of the following tranches of senior unsecured notes:
• $450 million of 1.000 percent notes due May 1, 2018
• $1 billion of 2.375 percent notes due May 1, 2023
• $500 million of 3.750 percent notes due May 1, 2043
• 550 million Euros (about $716 million) of 2.625 percent notes due May 2, 2033
The offerings are expected to close on May 2.
The move “allows more investors across Europe to participate in a AAA rated offering,” a Microsoft spokesman said in a statement. “ In addition, the pricing/coupon in Europe is very attractive in this 20-year tenor. Overall, the debt is opportunistic and helps us lower the overall cost of capital — similar to what we have done in the US.’’
The company said it intends to use the proceeds from the offerings “for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions and repayment of existing debt.”
Sid Parakh, an analyst with investment firm McAdams Wright Ragen, says that with most of Microsoft’s cash pile overseas, the company is taking on additional debt in order to take advantage of the attractive interest rates and to add to its limited domestic cash pile.
“The possible long-range rate of return on that additional money is likely to be better than what they’re paying for it,” he said.
Microsoft’s last bond offering was in November, with $2.25 billion of senior unsecured notes.