CREDIT APPROVAL MEMORANDUM

Borrower:	Microsoft Corp.	Ticker:	MSFT
Sector:	Technology	Date:	2026-02-19
Internal Rating:	AA	Score:	95/100
PD Rating:	0.01% - Minimal	Regulatory:	Pass

Executive Summary

This memorandum recommends approval of the proposed credit facility for Microsoft Corp.. Microsoft's Azure cloud division is gaining market share, driven by AI integration. Copilot adoption across the Office suite provides a new recurring revenue stream.

Key Credit Metrics

Metric	Value	Guideline/Covenant
Net Leverage (Debt/EBITDA)	0.6x	< 3.5x
Interest Coverage (EBITDA/Int)	27.4x	> 5.0x
Liquidity Score	95.8	> 70

Financial Analysis

Revenue & Earnings: The company generated $468.4B in revenue in 2024, with EBITDA of $125.3B. Forecasts indicate continued growth.

Liquidity: The company maintains a strong liquidity profile with access to capital markets and revolving credit facilities.

Cash Flow: Free Cash Flow conversion remains strong, supporting debt service and capital returns.

Risk Factors

Enterprise spending slowdowns could impact shorter-term bookings. AI infrastructure costs are significant and may weigh on margins initially.
Macroeconomic headwinds impacting consumer spending.
Technological disruption from competitors.

Recommendation

Approve. The risk/reward profile is favorable.

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Credit Officer