Microsoft Sells $2.67 Billion of Bonds With Record Euro CouponCharles Mead
Microsoft Corp., one of four U.S. companies with a top credit rating from Standard & Poor’s and Moody’s Investors Service, sold $2.67 billion of bonds with a portion of euro-denominated debt paying a record-low coupon.
The world’s largest software maker issued bonds in euros for the first time, raising 550 million euros ($715 million) with 20-year, 2.625 percent notes, the lowest coupon among similar-maturity, non-financial corporate bonds sold in that currency, according to data compiled by Bloomberg. The debt pays 55 basis points more than swaps.
In the U.S., the company also sold $450 million of 1 percent, five-year securities that pay 32 basis points more than Treasuries, $1 billion of 2.375 percent, 10-year notes that yield an extra 70 basis points and $500 million of 3.75 percent, 30-year bonds that pay a spread of 90.
Proceeds may be used to fund working capital, stock repurchases, acquisitions and debt repayment, Redmond, Washington-based Microsoft said today in separate filings.
“The debt is opportunistic and helps us lower the overall cost of capital,” said Peter Wootton, a spokesman for Microsoft. The pricing “in Europe is very attractive in this 20-year tenor.”
The company’s $14.3 billion of outstanding bonds before today’s sale include $750 million of 2.125 percent notes due November 2022 that traded at 98.5 cents on the dollar April 23 to yield 2.3 percent, or 60.2 basis points more than Treasuries, according to Trace, the bond-price reporting system of the Financial Industry Regulatory Authority.
While average yields on investment-grade corporate debt have dropped 8 basis points to 2.69 percent since Microsoft last issued bonds in November, the company’s new dollar securities were priced with higher coupons than those in the previous offering, according to Bloomberg and Bank of America Merrill Lynch index data.
Microsoft, along with Johnson & Johnson, Exxon Mobil Corp. and Automatic Data Processing Inc., are rated Aaa by Moody’s and AAA at S&P. Fitch Ratings ranks the company a level lower at AA+.