Microsoft sells $17 billion in bonds, will use money to refinance LinkedIn debt
It seems Microsoft is still picking up the pieces of its LinkedIn acquisition even after a month of ownership. The company just sold a new round of bonds, with the proceeds going largely towards repairing the losses in the acquisition. The latest reported quarterly earnings, show LinkedIn had a loss of $118 million net income last quarter.
To nobody’s surprise, the tech giant didn’t find much resistance in its sale. In fact, Microsoft had almost twice as much demand than it had bonds to sell, according to Bloomberg Technology’s sources.
Even though the private deal still brought in $17 billion to the tech giant, analysts at Moody’s Investors Service feel that the company’s debt may increase given the upcoming repatriation taxes on Microsoft’s money overseas.
As Bloomberg explains:
Microsoft, like many peers in the technology industry, holds the vast majority of its cash overseas. Under current laws, it would pay a tax rate of 35 percent to bring back any of the $116.3 billion it holds abroad. With 95 percent of its cash subject to repatriation taxes, it has relied on the debt markets to fund programs like stock buybacks, acquisitions and refinancing deals.
It’s certain to say that the next year will put a lot of pressure on Microsoft. Investors are claiming that the company might fall from $59 billion long-term debt further down into $90 billion. Hopefully, the plans for LinkedIn’s integration will turn into profit within the next few months.Further reading: Bloomberg, Bonds, Investors, Microsoft