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Oracle's $18B Data Center Loan Sold at Nearly 10% Discount, Syndication Stalled for Over 6 Months
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A syndicated loan of approximately $18 billion for Oracle's Project Jupiter data center in New Mexico is reportedly being sold at a discount, with lead banks Santander and Jefferies offering the debt at 89-91 cents on the dollar, reflecting a market value of $160-164 billion. The loan distribution has stalled for over six months, forcing banks to retain more Oracle debt than planned. The loan, issued late last year, was based on Oracle's $300 billion, five-year cloud contract with OpenAI and assumed investment-grade credit conditions, but current yields now approach single-B credit levels. Fixed-income strategist Marta Villegas noted lenders are focused on data center construction progress rather than the OpenAI contract alone, as collateral remains hardware and permits until the facility is operational. Oracle's credit ratings have been downgraded or warned: S&P to BBB- (one notch above junk), Fitch at BBB with negative outlook, and Moody's at Baa2 with negative outlook. Oracle's debt stands at $129.5 billion with a debt-to-EBITDA ratio of 4.3x, far exceeding Big Tech peers. Capital expenditure for FY2026 is $55.6 billion, above the $50 billion target, with FY2027 guidance raised to $90-95 billion. Free cash flow has turned negative, and net debt is expected to exceed $105 billion.
Source report
Source: Guandian News
Oracle (ORCL.US) is reportedly facing challenges in distributing an approximately $18 billion syndicated loan tied to its "Project Jupiter" data center in New Mexico. The loan is being offered at a discount, with distribution stalled for over six months, highlighting tensions between AI data center construction timelines, corporate debt levels, and future cash flows. The situation has drawn attention to the financing model of the AI industry.
Key Details
- Loan Pricing: The loan is currently being quoted by lead banks, including Santander and Jefferies, at 89 to 91 cents per dollar of face value. This translates to a market value of approximately $16 billion to $16.4 billion, representing a discount of nearly 10% from the original face amount.
- Distribution Status: Distribution has reportedly been stalled for over six months, forcing banks to retain a larger-than-planned exposure to Oracle debt on their balance sheets.
- Origination: The loan was issued at the end of last year. Its underwriting logic was based on Oracle's $300 billion, five-year cloud contract with OpenAI, and assumed investment-grade credit conditions. Current market pricing now reflects yields close to those of single-B rated credit.
Analyst Commentary
Marta Villegas, Head of European Credit Strategy at a fixed-income research firm, noted that lenders are no longer focused solely on the OpenAI contract but on the construction progress of the data center. Until the New Mexico facility is energized and begins generating revenue, the loan collateral primarily consists of hardware equipment and related permits.
Credit Ratings
- S&P Global: Downgraded Oracle's credit rating to BBB- in July 2026, just one notch above junk status.
- Fitch: Affirms Oracle at BBB, with a warning of potential negative rating action if leverage remains above thresholds.
- Moody's: Maintains a Baa2 rating with a negative outlook.
Financial Profile
- Total Debt: Approximately $129.5 billion
- Debt-to-EBITDA Ratio: Approximately 4.3x (compared to less than 1x for Alphabet, Amazon, Microsoft, and Meta)
- Capital Expenditure (FY2026): Approximately $55.6 billion, exceeding the original target of $50 billion
- Capital Expenditure Guidance (FY2027): Raised to $90–$95 billion
- Free Cash Flow: Has turned negative
- Net Debt: Expected to exceed $105 billion
Disclaimer: This content and data are compiled by Guandian based on publicly available information and do not constitute investment advice. Please verify before use.
Source
证券之星-滚动新闻Neutral / independent
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Oracle’s $18B AI data center loan trades at discount amid credit downgrade