Oracle’s Bond-Market Stress Hits 16-Year High Amid AI Investment Fears

Oracle's credit default swaps have surged to their highest level since the 2009 financial crisis, with protection costs jumping to 1.28 percentage points—a threefold increase since June. The spike follows a deluge of bond sales in the tech sector, where Oracle stands out for its aggressive debt issuance and weaker credit profile compared to cloud rivals.

Investors are increasingly using Oracle's CDS as a hedge against potential AI market turbulence. The widening gap between massive AI investments and tangible productivity gains has fueled concerns, drawing comparisons to past speculative bubbles. "We've seen these cycles before," says TD Securities strategist Hans Mikkelsen, alluding to dot-com era parallels.

Morgan Stanley recently flagged Oracle's mounting debt as a key risk. The company has issued tens of billions in bonds this year, both directly and through project financing, making its credit instruments a bellwether for tech sector stability.