Even In This Market, Microsoft Debt An Easy Sell

Microsoft (NSDQ: MSFT) said this morning that it would likely fund at least some of its $44.6 billion proposed Yahoo buy with debt. Everybody knows the credit markets remain brutal and barren, but that isn’t likely to be a problem here. WSJ talks to some bond market participants and finds the company would find plenty of eager buyers of its debt at rates extremely attractive to the company — about 1.6 percent higher interest rates than what the US Government (which can literally print currency) has to pay, by some estimates. That’s not surprising: as big as the offer is, it’s still not stretching Microsoft particularly thin, and its core businesses remain cash factories. Certainly this won’t come as a surprise to Microsoft; most likely, its decision to do some debt financing is based on how cheaply it can raise capital. Also, it’s yet another reason why a private equity white knight would have a hard time competing with Microsoft here, since they would have to raise more debt at less favorable rates.

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