Oracle is seeking to raise US$10 billion through a U.S. dollar bond issuance.
The Zhitong Finance APP has learned that the global cloud infrastructure and database giant$Oracle (ORCL.US)$On Monday, it launched a $10 billion U.S. dollar bond offering, just days after the company announced a new capital expenditure plan to fund investments in its artificial intelligence (AI) infrastructure.
Oracle is down in early trading, now down nearly 5%.
According to a person familiar with the matter, the company is marketing this bond offering in six tranches, with maturities ranging from two years to 20 years. The source said the initial price guidance for the longest‑maturity tranche is approximately 360 basis points over U.S. Treasuries.
The offering prospectus indicates that the expected ratings for this bond series are: Moody's "Baa2", S&P "BBB-", and Fitch "BBB". Notably, S&P's BBB- rating is at the lowest tier of the investment-grade spectrum, just one step above the threshold for "junk bonds." The net proceeds from the offering will be used for general corporate purposes, including capital expenditures, debt repayment, future investments or acquisitions, as well as the distribution of cash dividends or share repurchases.
The U.S. Securities and Exchange Commission (SEC) EDGAR system shows that Oracle filed an automatic shelf registration statement (S-3ASR, File No. 333-299752) on November 2, providing the basis for this bond offering.
The immediate driver behind Oracle's latest large-scale fundraising round is its aggressive bet on AI cloud infrastructure. At its Investor Day in Las Vegas on October 28, the company explicitly stated that capital expenditures for fiscal year 2026 have already doubled year over year to $55.7 billion. According to FactSet, they are expected to jump another 65% this fiscal year to $91.9 billion to meet major customers' contracted demand for cloud computing power.
To manage leverage, Oracle has committed to investors that, over the 2027–2030 fiscal-year investment cycle, it will cap total incremental financing at US$20 billion (excluding refinancing of existing debt), with roughly US$10 billion each in equity and debt. This US$10-billion bond issuance constitutes the bulk of that debt component. The company has also pledged to achieve positive free cash flow by fiscal year 2029, setting its target for that year at over US$30 billion.
AI Financing Concerns and Credit Risk Indicators Surge
However, despite optimistic expectations, concerns over the massive financing for AI infrastructure continue to simmer in the bond market, with Oracle becoming a "barometer" for investors betting on AI debt risks.
This issuance comes just days after Microsoft (MSFT.US) ended a nearly three-month lull in bond offerings by major tech companies. Currently, bond buyers are demanding higher risk premiums to shoulder the risks associated with companies tied to the AI investment boom and have already paid such premiums to protect themselves.
Since last year, several companies, including Oracle, have poured hundreds of billions of dollars in borrowed funds into the market to finance new data centers and chip purchases, raising questions about whether these expenditures will yield a return.
According to S&P Global Market Intelligence data, Oracle's five-year credit default swap (CDS) spread touched a record high of around 320 basis points earlier last month, nearly doubling year-to-date. This level typically corresponds to BB/B-grade (high-yield bond) credit, far above the pricing warranted by its investment-grade rating.
S&P downgraded Oracle to BBB- in July this year and warned that if the company's leverage remains above 4 times or it fails to generate positive free cash flow by fiscal year 2029, another downgrade could follow. At that point, Oracle's debt would fall into junk‑bond territory, potentially triggering forced sell-offs by institutional investors that only invest in investment‑grade securities.
According to FactSet data, Oracle has issued approximately $117 billion in long-term debt, with an additional $39 billion in capital and lease commitments; analysts expect its free cash flow for the current fiscal year to be about -$23.7 billion, further expanding to roughly -$36 billion in the next fiscal year.