Microsoft (MSFT) will sell more than $4.7 billion worth of bonds to fund share buybacks and dividend payments for shareholders of the world's largest software maker.
The company will sell about $2.7 billion worth of notes due by 2015, with the remainder of the debt payable in 2020 and 2040, Microsoft said in a Securities & Exchange Commission filing today. 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.
Microsoft is taking out loans to repay its shareholders as interest rates hover near record lows. The company said Tuesday that it would boost its quarterly dividend by 23% -- its first dividend increase in two years -- while its board authorized the company to issue as much as $6 billion of additional debt.
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 a Bloomberg News report.