Microsoft reportedly planning at least $25B bond sale to fund AI buildout (Oct 29)

What happened

Media reports said Thursday that Microsoft is planning to raise at least $25 billion through a bond sale. The news reversed Microsoft's post-earnings rally — shares had been up 2.9% in premarket trading after a strong quarter but fell about 1.5% on Thursday as investors absorbed the debt-raise report. The sale would fund continued AI infrastructure spending even though the company kept capex in check this quarter. Trevor Slaven, global head of asset allocation at Barings, framed the market's unease: the AI buildout is 'increasingly debt financed,' which 'grows the potential economic profits over time' but 'creates more leverage and just creates a bit more risk in the system.'

Who’s affected

• Microsoft (MSFT): shares fell ~1.5% Thursday after reports of the bond sale, reversing the post-earnings premarket gain
• Alphabet (GOOGL): the same debt-financed AI spending is the proximate cause of its record selloff
• Oracle (ORCL): already -4.6% Thursday after Wednesday's 12% Investor Day rally; AI debt stress is the sector-wide concern
• Investment-grade corporate bond market: a $25B+ Microsoft deal would be a jumbo supply event in a 5%+ 10-year yield environment
• AI infrastructure beneficiaries (Nvidia, data-center names): bond-funded hyperscaler capex sustains order books even as investors scrutinize leverage

Sources

businessday.co.za