Kathmandu. Microsoft, the world’s leading tech company, is investing heavily to expand its artificial intelligence (AI) and cloud computing business.
The company is raising $25 billion by issuing bonds. The money will be used to meet its general business needs and capital expenditures.
Microsoft is projected to spend about $175 billion by 2026. The company aims to expand data center capacity and meet the growing demand for AI services.
Why is the company borrowing $25 billion?TAG_OPEN_strong_21
Despite billions of dollars in cash, Microsoft is raising $25 billion in debt. The main reason for this is the need for a large amount of investment in artificial intelligence and cloud computing.
Microsoft is rapidly expanding its AI business. The use of many of the company’s AI products and cloud services is increasing. As a result, it requires significant computing capabilities. This requires large investments in building large data centers, installing servers, and other technological infrastructure.
In this context, raising debt by issuing bonds will remove the need for Microsoft to immediately use its existing cash reserves. It will also provide the company with funds for other necessary expenses. The debt raised will provide the company with the flexibility to expand its AI and cloud services, fund potential acquisitions, provide returns to shareholders, and meet other financial needs.
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Microsoft’s bond issuance received an overwhelming response from investors. The company had aimed to raise $25 billion. However, investors received orders worth about $115 billion. This is about 4.6 times the amount allocated.
The company has issued bonds in 10 tranches with different maturities from 2028 to 2066. The interest rates on these bonds range from 4.85% to 6.35%. In addition, the company has also included two floating-rate bonds worth $1 billion.
Microsoft has received AAA credit ratings from both Moody’s and S&P. It is one of the strongest credit ratings in the world. This increases investor confidence in the company. Earlier in 2017, Microsoft raised $17 billion by issuing bonds in the US market. – Agency
