Microsoft’s Associated Data Center Bond Issuance May Rise to $3.9 Billion

According to Bloomberg, a $3.9 billion bond offering tied to Microsoft has attracted more than $8 billion in investor demand, prompting issuers to increase the transaction size by roughly $1 billion from its initial target. The bond will be issued via a subsidiary of Blackstone-backed QTS Realty Trust LLC to finance a data center project in Georgia, U.S. The debt is expected to be issued by two special-purpose liability subsidiaries of QTS’s QualityTech LP. The bond’s coupon rate is projected to land in the high 6% range, and it will be issued at a discount, resulting in an actual yield between the low and mid-7% range. While the bond is expected to earn an investment-grade rating, its yield is on par with that of a single-B junk bond. Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley held conference calls with investors last week to present the offering. The banks are leading underwriters for the deal, and the bond has been marketed to the market for several consecutive days. The bond transaction could price as early as Tuesday, though discussions are still ongoing and the final issuance plan remains subject to change.