Through four offerings, Microsoft is offering corporate debt – senior, unsecured – denominated in both Euro and Dollar denomination notes worth north of $2.6 billion.
Even companies of great wealth in cash and assets keep debt on their books. Simply having cash isn’t always enough. Where it is located, for example, matters. If your company is based in the United States, but has a large percentage of its total cash overseas, it isn’t quite as useful; repatriation of those funds will incur stiff taxes.
Also, depending on the circumstance, it can be a net-positive ROI move to reserve cash and other short term investments and vehicles and raise new monies through debt, provided that the coupon rate on the new notes is lower than the EV on the extant funds. In short, raising debt in select circumstances can be economical.
Now, to the figures! Here’s, via Microsoft’s announcement, are what the company is selling:
  • €550 million of 2.625 percent notes due May 2, 2033
  • $450 million of 1.000 percent notes due May 1, 2018
  • $1 billion of 2.375 percent notes due May 1, 2023
  • $500 million of 3.750 percent notes due May 1, 2043
It’s nice to raise debt when you are a wealthy, profitable company. You try and get an unsecured mortgage for more than $2.6 billion and pay as little as 1 percent on it. Try.
What will Microsoft do with the funds? It isn’t saying much, releasing a vague statement to the following effect:
Microsoft intends to use the net proceeds from the offerings for general corporate purposes, which may include, among other things, funding for working capital, capital expenditures, repurchases of capital stock, acquisitions and repayment of existing debt. The offerings are expected to close on May 2, 2013.
If you have some cash to park, you have only about a week to buy in.