On the one hand, exit offer to 60 thousand staff, on the other hand, why is Microsoft taking a loan of 25 billion dollars?

Tech company Microsoft has taken two big steps one after the other. These decisions have caught the attention of the entire world. The company has offered a voluntary exit package to around 60 thousand employees working in India, America, Canada as well as Britain. A few days after this decision, the company has now entered the loan market. Microsoft is raising $25 billion by selling bonds. The company says that the buyout offer to employees is a completely separate decision from the process of taking a loan. But the timing of both these decisions has created a stir in the tech world.

Why is Microsoft taking a $25 billion loan?

Artificial Intelligence (AI) related facilities are becoming very expensive to build and run. This is the reason why the company is now raising $25 billion in funding. Microsoft needs massive computing capacity to support its cloud services with its AI products. This will require huge investment in new data centers, servers and other infrastructure. The company has projected capital expenditures of about $175 billion for the year 2026. By raising money through bonds, the company will get long-term funding.

Microsoft’s Chief Financial Officer (CFO) Amy Hood said during the earnings call that despite having a strong credit rating, the company has not yet resorted to the debt market. Now the company has issued these bonds in 10 different tranches. These bonds will mature between the years 2028 and 2066. The offer of bonds will close on November 4. This is the company’s first investment-grade debt offering since 2017. In the year 2017, the company raised $17 billion.

Investors placed $115 billion in bets

Investors have shown tremendous interest in Microsoft’s decision to raise $25 billion. Orders for the bonds totaled about $115 billion, according to people familiar with the matter. This amount is about 4.6 times more than the requirement of the company. Interest rates on fixed-rate bonds range from 4.85% for notes maturing in 2028 to 6.35% for bonds maturing in 2066. It also includes two floating-rate tranches of $1 billion each.

This investor confidence is due to Microsoft’s excellent credit rating. Other than Johnson & Johnson, Microsoft is the only American public company to receive a AAA rating from both Moody’s and S&P. Just how expensive this AI race has become can be gauged from the fact that major data center builders worldwide have raised more than $313 billion in bonds this year. This amount is almost three times more than the money raised in the entire year 2025. In August, Alphabet also raised $25 billion through debt, while Meta raised the same amount from an equity deal.

Why did the company give exit offer to 60 thousand employees?

Microsoft announced its voluntary exit program on October 26. This offer is for employees level 70 or below in select teams in the US, India, Canada and the UK. The company has a total of 2,23,000 full-time employees. Accordingly, this offer covers more than a quarter of the total workforce of the company. Teams that have received this offer include AI Experience, Copilot, Finance, HR, Xbox, Windows Plus devices. However, security team along with marketing, commercial business has been kept out of it.

According to Amy Coleman, the company’s chief people officer, the program offers employees the opportunity to make a career change with company support. The company has clarified that this offer is completely voluntary. This should not be considered a forced retrenchment. Even though 60 thousand employees are under its purview, only 3,000 employees or less will accept it, according to a company spokesperson. This number is only 5% of eligible employees. CFO Amy Hood also said in an internal memo that there are good opportunities for growth within the company, so few people will take up the offer.

Earlier this year, the company offered a voluntary retirement package to about 9,000 American employees, which one-third of them accepted. This helped the company mitigate the impact of subsequent layoffs. Also in July, the company cut 4,800 jobs during restructuring, which was 2.1% of its total workforce.

The investment pressure increased due to the strong boom in the cloud business

Microsoft’s spending is rising at a time when its cloud and AI business is expanding rapidly. In the last quarter, the company’s revenue increased by 19%, while operating income increased by 21%. The company’s cloud platform Azure reported a massive 48% increase in revenue. Amy Hood said demand for the Azure service far outstrips its current supply. To meet this demand, engineering teams are busy increasing capacity. This lack of supply compared to demand is why companies are spending so much money on data centers. Microsoft will detail its future AI strategy at the annual Ignite conference, which runs from November 17 to 20.