Printed from http://www.electronista.com

Microsoft to sell bonds for the first time

updated 04:55 pm EDT, Mon May 11, 2009

Microsoft offering bonds

The world's largest software vendor, Microsoft, is selling bonds for the first time as of today. Despite having $25 billion in cash, the company has at least enough demand for $15 billion in bonds, an investor says. According to a Monday WSJ report, the company will sell notes that mature in five, 10 or 30 years. The prospectus says net proceeds from the sale will be used for general corporate purposes such as working capital, capital expenditures and repurchases of capital stock.

"It's a nice diversifier," said Mike Kastner, the head of fixed income at Sterling Stamos Capital Management. "It has a lot of characteristics that people want in their portfolios," he added, calling Microsoft a "super blue chip name."

Price guidance shows the risk premium being offered on the bonds is low, indicating investors are willing to accept less to own the bonds.

People who are in the know about the offering believe the five-year note would have an interest rate around 95 basis points over comparable Treasury yields, while the 10-year and 30-year notes sit at about 105 basis points more than Treasury bonds.

Some believe Microsoft is raising money to exchange Internet search assets with Yahoo, as recently rumored, or buy out SAP to increase its presence in business software.



By Electronista Staff
Post tools:

TAGS :

toggle

Comments

  1. Feathers

    Grizzled Veteran

    Joined: Oct 1999

    +1

    cynical

    This exploitation of general cynicism with regard to the true value of many stocks and shares has to make this latest Microsoft move the most undeniably evil thing they have ever done. Do they want to become a bank? Sucking between $6 and $15 Billion out of the investment economy for their own purposes poses a clear and present danger to the U.S. economy. Can you trust Steve Ballmer any more than any of the guys at Bear Stearns?

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    +2

    wow

    microsoft is so smart, first they pay a dividend and now they need to loan money from the same investors.
    Microsoft is becoming a bank, talk about diversifying.

  1. Bobfozz

    Fresh-Faced Recruit

    Joined: Jul 2008

    +1

    Anywho who...

    invests this way needs to really have their head examined. I don't even see MS being around in 30 years, maybe 10 even. They are too far behind the ball unless they get new executive management and leadership who have a vision and these people do not grow on trees according to my sources in the headhunter business community.

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    re: cynical

    Didn't think about that, i rather invest in CityBank and i hate that bank to the bone.

  1. gor3don

    Fresh-Faced Recruit

    Joined: Nov 2005

    -3

    you people

    have no understanding about business and the use of capital.

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    we people

    oh, banks and executives do?

    MS asks money from us to pay for there investments, that part we all understand. ok, when i take a bond for 30 years and MS is dead in 20 years, how does that work out for me?

  1. fubar_this

    Fresh-Faced Recruit

    Joined: Jul 2006

    +1

    re: we people

    So you're saying we should stop trading bonds period? That's what has this economy in such a mess. There's no guarantee any company will be around in 30 years. I can't think of a single company that I would guarantee will be around in 30 years, including Apple (heck 10 years ago Apple was almost dead). Your bank has no guarantee you won't drop dead in the middle of a recession when they can't unload your house. Yet they still make loans.

    Banks and companies NEED to start lending/borrowing again. The entire world revolves on credit. It always has. It always will. Unless you know how to change that (and people a lot smarter then you have failed) then let Microsoft issue its bonds. Heck they sound like a great deal for those with the ability to buy.

    No need for all the hate just because it's Microsoft, this is how the world works.

  1. paulgunn

    Fresh-Faced Recruit

    Joined: Oct 2001

    0

    waiting...

    Actually I'm waiting for President Obama to nationalize Microsoft so we can put a fork in that too.

  1. Peter Bonte

    Fresh-Faced Recruit

    Joined: Aug 2001

    0

    re: we people

    For the system to work we (the people) at least have to trust it and the company that we lend it to. Why would we trust a company that doesn't even have a governmental backing?

    When i have cash on a bankaccount and the same amount on the same bank as a loan, when the bank goes bankrupt i will still have to fulfill the loan but lose the cash. The current system is cranky, unfair and not trustworthy anymore, we need change and i hope Obama has the balls to do it.

  1. jcsegenmd

    Fresh-Faced Recruit

    Joined: May 2009

    +1

    makes you wonder

    (1) does Microsoft really have 20 billion left or are their accountants hiding the widening losses in the market place (most recent quarter, zum Beispiel)

    (2) will Microsoft be around in even 10 years? As small businesses increasingly defect to the Apple platform and realise 10% savings on their IT budgets, larger businesses won't be far behind; worker frustration goes down, productivity and happiness in the workplace go up. Perhaps the only reason Microsoft has survived this long is that no one has been brave enough to drop the few hundred million to write for enterprise

    Someone will

    Microsoft sees the dangers and is trying to staunch the haemorrhage at the consumer level; once a consumer uses a Mac at home and is converted, that consumer wants to take the platform to work and be as productive

Login Here

Not a member of the MacNN forums? Register now for free.

toggle

Network Headlines

toggle

Most Popular

Sponsor

Recent Reviews

Cat B100

Cat is primarily known for its heavy-duty machinery used in the construction industry and farming, among other areas. What may not be ...

Linksys EA6900 AC Router

As 802.11ac networking begins to makes its way into more and more devices, you may find yourself considering an upgrade for your home ...

D-Link DIR-510L 802.11AC travel router

Having Internet access in hotels and other similar locations used to be a miasma of connectivity issues. If Wi-Fi was available, it wa ...

Sponsor

toggle

Most Commented

 
toggle

Popular News