Oracle’s Rising Debt Risk Sparks Investor Concerns Amid AI Spending Spree
Oracle's credit health is under scrutiny as Morgan Stanley warns of escalating default risks. The tech giant's five-year credit default swaps (CDS) surged to 1.25 percentage points in November—a three-year high—with analysts projecting potential climbs to 2 percentage points by 2026 without transparent financing plans.
The company's aggressive borrowing includes $18 billion in recent bond sales and ties to $56 billion in data center construction loans. Banks and investors are actively hedging Oracle debt, reflecting mounting anxiety over its AI infrastructure investments.
All eyes turn to Oracle's December 15 earnings call for clarity on funding strategies. The current CDS levels approach those seen during the 2008 financial crisis, when protection costs peaked at 1.98 percentage points.