Microsoft May Issue Debt to Fund Dividends, Stock Buyback

Microsoft Corp. (MSFT) may sell debt later this year to fund share buybacks and dividend payments for shareholders of the world's largest software maker, Bloomberg News reported, citing a person familiar with the process that it didn't identify. Microsoft shares rose on the report.

Microsoft may be able to issue as much as an additional $5 billion in debt without risking its credit rating, the wire service said, citing the person. The company may opt to issue debt because interest rates are near record lows, and raising cash from selling overseas assets would trigger a tax obligation, Bloomberg said.

Microsoft Chief Financial Officer Peter Klein said at a Sept. 7 Citigroup conference that the company, whose debt rating is the highest possible at both Moody's Investors Service and Standard & Poor's, would consider taking on more debt to fund a higher dividend payment or buy back shares, according to the wire service.

Microsoft had a $5.51 billion cash balance as of June 30, down 9% from a year earlier, the company said in July. The company also had $4.94 billion in long-term debt, up 32% from a year earlier. Company spokesman Peter Wootton declined to comment on the matter, according to Bloomberg.

Shares of Microsoft rose 5.1% to $25.07 in NASDAQ trading today.