Microsoft Prices $25 Billion Bond Sale Three Days After Offering Buyouts to 60,000 Workers

Since Microsoft announced a voluntary exit offer for roughly 60,000 employees on Monday, Oct. 26, the company has reported quarterly earnings and gone to the bond market for the first time in nine years. The two moves landed within days of each other. Microsoft has not said they are connected.

The bond deal

Microsoft priced $25 billion of senior unsecured notes on Thursday, Oct. 29, a day after its earnings call. The deal has ten tranches maturing between 2028 and 2066. Closing is set for Wednesday, Nov. 4.

Fixed coupons run from 4.85% on $2 billion of notes due 2028 to 6.35% on $2 billion of notes due 2066. Two tranches are floating-rate notes worth $1 billion each.

People familiar with the deal said orders peaked at about $115 billion, roughly 4.6 times the amount offered. Microsoft's last U.S. investment-grade offering was in 2017, when it raised $17 billion.

Microsoft said it will use the proceeds for general corporate purposes. Its statement lists working capital, capital expenditures, stock repurchases, acquisitions and repayment of existing debt.

On the earnings call, CFO Amy Hood said: "We're fortunate to have access in the debt markets, given where our ratings are, and we haven't yet tapped that."

Microsoft and Johnson & Johnson are the only publicly traded U.S. companies with AAA ratings from both Moody's and S&P. That rating helps explain the demand.

The numbers behind the borrowing

The company is not borrowing from weakness. Microsoft reported first-quarter fiscal 2027 revenue of $92.28 billion, up 19% from a year earlier and above the $90.63 billion Wall Street estimate. Net income was $36.6 billion.

The spending is the issue. Microsoft has outlined about $175 billion in calendar 2026 capital expenditures, including finance leases. Much of that goes to data centers and chips for customers such as OpenAI and Anthropic. In July, the company said September-quarter capital spending would top $50 billion, against $34.9 billion in the same quarter a year earlier.

Microsoft is also in better cash shape than some peers. It reported $19.64 billion of positive free cash flow in the June quarter, down 23% from a year earlier, while Alphabet and Amazon posted negative free cash flow that quarter.

Alphabet sold $25 billion of bonds in August. Meta raised $25 billion through equity instead. Hyperscalers and data center developers have raised more than $313 billion in investment-grade bonds globally this year.

The workforce side

The exit offer covers eligible employees in the U.S., Canada, India and the U.K. at internal level 70 and below, which Microsoft's spokesperson described as vice president level and below. That is about 27% of the company's 223,000 employees. Microsoft had 228,000 at the end of 2025.

Sales and marketing staff, data center teams, certain engineering groups and some corporate functions are not participating. Employees have until early December to decide, and those who accept leave Dec. 31.

Chief People Officer Amy Coleman wrote in a memo that the offer "reflects an important part of how we're evolving our approach to change: creating greater flexibility and, where possible, more ways for employees to shape their next chapter." The terms are similar to Microsoft's standard severance. Earlier this year, that meant at least 60 days of base pay and, for most employees, up to 39 weeks depending on seniority and tenure.

A Microsoft spokesperson said there are no plans for another buyout at this time. A person familiar with the plan told CNBC that Microsoft has no headcount target for this round.

This is the company's second voluntary program this year. A retirement offer in the spring went to about 9,000 eligible U.S. employees, and about one-third took it. In July, Microsoft announced 4,800 layoffs, about 2% of its workforce, including many in Xbox.

What Microsoft says and what is open

Microsoft frames the buyout as a way to give workers a choice and to let teams adjust their staffing. Its financial defense is the record revenue, the positive free cash flow and a rating few companies hold.

The company has not linked the buyout to the borrowing, and neither Coleman's memo nor the bond statement does either. Both sit alongside capital spending that has outgrown even Microsoft's profits.

Investors have not been uniformly pleased. Microsoft shares closed at $507.12 today, Nov. 2, down $14.79, or 2.83%.

The next fixed dates are the bond closing on Nov. 4 and the early-December deadline for employees. Microsoft has not said how many will accept, or whether it will return to the bond market as its capital spending continues.