As Gregory White highlighted yesterday, Microsoft just issued some ridiculously cheap debt. Investors only asked to receive 0.875% in interest per year to lend money to Mr. Softy for three years.
Yet Econompic takes it a step even further… The chart below shows that Microsoft issues debt almost as cheaply as the U.S. government does, even for longer maturity bonds. Microsoft’s 30-year bonds tie with those of Johnson & Johnson as having the lowest coupons of any corporate debt on the market, at just 4.5%.
Our MSFT analysis from yesterday explored how Microsoft could potentially buy itself back out of the stock market with just 10 years of cash flow.… and yet bond markets are betting that Microsoft can comfortably last 30.
(The chart below comes from Econompic and shows U.S. government bond yields vs. those of Microsoft.)
Disclaimer: The author owns shares in Microsoft (MSFT). His associates could have exposure to Microsoft shares at any time and without notice. This is not an investment recommendation and data may be subject to error despite best efforts. The author’s opinion could change at any time.