Oracle taps $25B bond as debt hits $130B and rating slips to junk's edge
What's the deal? OracleDealroom has a profile for this one. Try Dealroom → issued US$16.2B bond, the first tranche of US$29.1B to $50 billion financing plan for 2026 to fund its AI infrastructure build-out. It ranks among the largest post-IPO debt raises on record for a US company, sitting in the top 1% of 160 comparable deals.
Why now? Oracle needs capital to sustain a data center expansion that has generated US$412.8B order book. The bond, maturing in 2029, was issued on February 2 alongside US$12.9B at-the-market equity agreement and a mandatory convertible preferred offering of 100 million depositary shares carrying a 6.50% dividend.
The catch: S&P Global RatingsDealroom has a profile for this one. Try Dealroom → cut Oracle's long-term issuer rating to BBB- on July 9, 2026 — one notch above junk — citing an "uncertain path to profitability." The cost of insuring Oracle's debt had already surged past 125 basis points, a level unseen since the 2008 financial crisis.
The numbers: Oracle ended May with roughly $130 billion in total debt. Capital expenditures jumped 162% to nearly $56 billion in fiscal 2026, tipping free cash flow to negative $24 billion. Revenue rose 17% to $67.4 billion.
The workforce: Even as it expands its physical footprint, Oracle cut roughly 21,000 jobs in fiscal 2026 — a 13% reduction globally. The disclosure landed amid a broader technology sell-off, adding pressure to shares down about 33% year to date.
What could go wrong? S&P expects leverage to stay stretched and free cash flow weak for at least two years. To reassure investors, Oracle has pledged no further bonds in 2026, a commitment tied to keeping its investment-grade status.
The signal: Oracle has become a test case for whether the bond market can keep absorbing the AI industry's capital demands. Its $638 billion backlog promises future returns; its balance sheet shows the cost of chasing them.
Read more: aktiencheck.de
Image credit: Håkan Dahlström
