New York: Microsoft, the world's biggest software maker, plans to sell $4.75 billion (Dh17.4 billion) of bonds a day after its board boosted the company's dividend and approved the issuance of as much as $6 billion in new debt.

Proceeds may be used to fund working capital, capital expenditures, stock buybacks and acquisitions, the Washington-based company said Wednesday in a regulatory filing that didn't disclose the size or timing of the sale.

The bonds may be sold soony, said a person familiar with the transaction said, who declined to be identified as terms aren't set.

Microsoft is marketing the debt after yields on investment-grade corporate bonds fell to 3.73 per cent on Wednesday, according to Bank of America Merrill Lynch, the lowest since daily records began on October 31, 1986.

Demand for the securities, from one of only four nonfinancial US companies with the top credit grade, will be "huge across the globe," said Mirko Mikelic, a money manager at Fifth Third Asset Management.

"I'm sure it's going to be a name everyone's going to want," said Mikelic, who helps oversee $13 billion of fixed- income assets in Grand Rapids, Michigan.

"It's a triple-A credit, great company, well-run, what's there not to like, other than the pricing?"

Microsoft plans to sell $1 billion each of 3-, 10- and 30- year bonds and $1.75 billion of 5-year debt, the person said.

The 3-year notes may yield 25 basis points more than similar-maturity Treasuries, the 5-year debt may pay a spread of 40 basis points, the 10-year securities may yield 55 basis points more than benchmarks, and the 30-year bonds may pay a spread of 83 basis points, the person said. A basis point is 0.01 percentage point.

The company will use proceeds to pay for dividends and share repurchases because much of its cash is held overseas, a person familiar with the matter said last week.

Peter Wootton, a spokesman for the company, wasn't immediately available to comment.

Standard & Poor's and Moody's Investors Service also rank Exxon Mobil, Johnson & Johnson and Automatic Data Processing as AAA, or an equivalent Aaa, the same level they assign to US government debt. J&J sold $1.1 billion of bonds at the lowest interest rates on record for 10-year and 30- year securities last month, according to Citigroup data going back to 1981.

"The Treasury markets have lower rates than mid-August and that creates the likelihood that Microsoft will price at lower rates than the J&J deal," said Guy LeBas, chief fixed-income strategist and economist at Janney Montgomery Scott in Philadelphia.

Microsoft reported $36.8 billion in cash and short-term investments at the end of last quarter. Much of that is held overseas, forcing the company to pay taxes on any of the money used for dividends or stock repurchases.

The company boosted its quarterly dividend by 3 cents, or 23 per cent, to 16 cents a share on Wednesday.

"This higher dividend, combined with our ongoing share repurchase programme, reflects our commitment to returning capital to our shareholders and our confidence in the long-term growth of the company," Microsoft Chief Financial Officer Peter Klein said in a statement.

Acquisition opportunities

"You can take it as a sign of soft expected future stock market performance," LeBas said. "Microsoft doesn't have a lot of acquisition opportunities, doesn't have a lot to do internally, apparently, with this capital, so they're giving it back to shareholders."

Microsoft sold its first bond in May 2009, a $3.75 billion offering, in a bid to diversify its capital structure and add to its cash pile for acquisitions, capital expenses and share buybacks.

The sale comprised $2 billion of 2.95 per cent, 5-year notes; $1 billion of 4.2 per cent, 10-year debt; and $750 million of 5.2 per cent, 30-year bonds.