Oracle to raise USD15b in bond sales to fuel AI spending: Bloomberg
Make us a preferred source
Make us a preferred source on Google
The news: Oracle is planning to borrow USD15 billion ($22.8 billion) from the US investment-grade bond market as the software maker boosts spending to invest in building out its cloud infrastructure catering to growing AI demand.
The numbers: Sources told Bloomberg that the debt will be raised in up to seven parts, including a 40-year bond. Initial price discussions for that portion of the deal are around 1.65 percentage points above similarly dated Treasuries.
The context: The news comes amid Oracles efforts to beginning fulfilling a series of cloud infrastructure deals it has inked with customers including OpenAI and Meta, weighing on the company’s spending.
The deals will see Oracle spend hundred of billion to rent and power data centres to meet the obligations of the mega deals, meanwhile, Oracle’s cash flow flipped negative for the first time since 1992. Bloomberg analysts expect that the metric will continues to be in free fall before returning to positive in 2029.
Oracle had about USD95 billion of long-term debt outstanding at the end of August, the masthead writes. The Wednesday debt deal may see a measure of Oracle’s leverage relative to its earnings climb, though it should still be able to maintain its high-grade ratings, Bloomberg analysts wrote.
The cost of insuring Oracle’s debt against default over the next five years jumped to the highest level since 7 May on Wednesday.
The source: Bloomberg
