Microsoft Corporation (NASDAQ:MSFT) is planning to sell some of their debt this year in order to pay for dividends and repurchase shares. The company plans to raise as much as they can without jeopardizing their debt rating of AAA.
According to a source with Bloomberg, Microsoft could potentially issue as much as $6 billion in debt without putting their rating at risk. Microsoft CEO Steve Ballmer is pressured to return some of the company’s $36.8 billion in cash and short term investments to investors in the form of dividends.
Microsoft had around $22 billion in free cash flow last fiscal year with about half of that being in the U.S. and the rest overseas. Microsoft started paying a dividend in 2003 and offered $3-a-share in 2004. Microsoft repurchased over $78 billion in stock since this 2006. Microsoft is in the middle of a $40 billion buyback allowance, running through 2013. Microsoft sold its first debt in May 2009 in the form of a $3.75 billion offering.