Why Microsoft seeks $25 bn after 60K staff buyout?

Microsoft is seeking $25 billion in debt financing as its artificial intelligence investments drive up infrastructure costs, following a voluntary employee exit program for around 60,000 workers in India, the US, Canada, and the UK. The company anticipates $175 billion in capital expenditures by 2026 to support its AI and cloud computing initiatives.

Microsoft's bond sale, the first US investment-grade issuance since 2017, attracted significant investor interest, with orders totaling approximately $115 billion, nearly four and a half times the intended $25 billion amount. The fixed-rate bonds carry interest rates between 4.85% and 6.35%, with maturities ranging from 2028 to 2066.

Microsoft's Chief Financial Officer Amy Hood previously stated that the company had not yet utilized debt markets due to its strong credit ratings, and the voluntary exit program was offered as a voluntary, time-limited opportunity for employees. Despite the extensive borrowing plans and workforce reduction efforts, Microsoft expects only a small fraction of the eligible employees to accept the voluntary exit program, which covers approximately a quarter of its global workforce.