NEW YORK — Salesforce Inc. returned to the capital markets Wednesday with a $25 billion multi-tranche bond sale, saying it will use the proceeds to repurchase shares under a newly expanded authorization, according to people familiar with the deal.
The San Francisco-based software company sold eight maturities ranging from three to 40 years, one of the largest investment-grade offerings so far this year, bankers working on the transaction said. Order books peaked above $90 billion before pricing narrowed to between 70 and 135 basis points over Treasurys, they added.
In a regulatory filing, Salesforce said its board on March 15 approved a program allowing the company to buy back as much as $25 billion of its common stock. The filing also noted that any unused bond proceeds could be applied to “general corporate purposes,” but executives told analysts on a follow-up conference call that share repurchases are the primary objective.
“Management clearly believes the stock is undervalued after last quarter’s sell-off,” said Stephanie Ng, a credit strategist at Horizon Capital. “The question is whether adding leverage at this point in the rate cycle ultimately helps shareholders.”
The offering marks the company’s largest single debt issue in its 25-year history and lifts gross debt to roughly $45 billion, according to S&P Global Market Intelligence. Salesforce retained its A-/A3 ratings at S&P and Moody’s, both of which assigned a stable outlook, citing robust free cash flow and recurring revenue.
Still, the weighted-average coupon on the new notes is 4.9 percent—about 150 basis points higher than the company paid in its last bond sale in 2022—underscoring the cost of borrowing after 12 months of Federal Reserve tightening. “Every dollar now costs more, so the buyback has to create real value for this to work,” said Carlos Menendez, senior portfolio manager at Alpine Fixed Income.
Some governance advocates criticized the timing. “Using debt to engineer earnings-per-share growth when organic expansion is slowing is risky,” said Lisa Graham of the nonprofit BoardWatch. Salesforce said it would maintain “disciplined” capital allocation and continue to invest in artificial-intelligence products.
Analysts will look for clues on the strategy’s success when Salesforce reports first-quarter earnings in late May. Should operating margins or credit metrics slip, ratings agencies could revisit their stance, potentially raising future financing costs.
For now, investors welcomed the supply; the bonds tightened 4–6 basis points in secondary trading Thursday, signaling healthy demand. Whether that enthusiasm endures may hinge on Salesforce’s ability to translate financial engineering into durable growth.