US$50bn funding blitz shows Oracle’s market access – and its vulnerability
Oracle has moved to retake control of its narrative after a brutal few months that wiped half a trillion dollars from its valuation, with the launch of a US$50bn financing package aimed at demonstrating its access to capital to dispel concerns about its rapidly rising debts.
The move yielded mixed results. While the cloud computing provider attracted more than US$125bn of demand for the US$25bn debt component, the largest order book ever for a corporate bond deal, the financing failed to halt the selloff in its shares, which slumped to a nine-month low.
That will make the equity part of the fundraising all the more painful. Oracle plans to sell as much as US$20bn of new shares over the coming weeks via an at-the-market programme. Each leg lower in its share price will bring additional dilution to its suffering investor base.
The decision to raise half the money in equity – Oracle also sold a US$5bn mandatory convertible preferred – was a major concession to growing investor concerns about the gargantuan amounts of debt the company is taking on to fulfil commitments made to hyperscaler clients such as OpenAI.
“Oracle has been in the eye of the storm,” said one senior banker who was involved in the financing. “They have shown a willingness to use equity when the perception before was that it would be all debt funded. From a funding, leverage and ratings perspective it draws a line.”
Brutal selloff
The US$50bn fundraising comes after a torrid few weeks for Oracle in markets. After its shares reached a record high in September, when the company was briefly valued at almost US$1trn, the stock has since fallen by 60%, erasing US$600bn in market capitalisation.
Driving the selloff are concerns that Oracle is assuming too much financial risk to build data centres and buy chips to fulfil contracts with hyperscaler clients that won’t generate any revenue for years – assuming they are able to pay at all. Its commitments to OpenAI have drawn particular scrutiny.
Unlike most players riding the AI wave, Oracle came into the current boom with already high debt levels. During the 2010s, it borrowed heavily to fund a series of acquisitions – and an aggressive share buyback programme that doubled founder Larry Ellison’s stake.
The latest bond sale brings its debts to almost US$133bn, making Oracle one of the most indebted corporates in the world. But that debt load is expected to explode in coming years, with analysts estimating it could reach almost US$300bn by the end of the decade.
“The fact that they put out a plan which was not just convertible but also equity financing in large size is a huge positive,” said one portfolio manager. “They are showing the market they know they cannot rely on the investment-grade market to fund all of this.”
New promise
In December, Oracle sought to address those concerns by committing to maintaining its investment-grade status – a major shift for a company that never previously had a formal debt policy. Last week it went a step further, promising not to return to debt markets this year.
“It was positive to get clarity on Oracle's financing,” said one hedge fund manager who bought the mandatory. "Oracle management had said they were not going to fund their 2026 capex entirely with debt and internally generated cashflow but had not been specific on the incremental funding.”
Whether those commitments will be enough to steady investor nerves remains to be seen. In recent weeks, both bond and loan investors have grown skittish about holding Oracle debt. Banks have struggled to offload US$38bn of loans backing two data centres being built by the company in Texas and Wisconsin.
Others have taken their fight to the courts. One group of investors has launched a class-action lawsuit alleging that Oracle misled them during a bond sale in September about the amount of debt the company would need to fulfil a US$300bn contract to supply OpenAI.
Investors who bought into that US$18bn bond sale have been hit hard. While all six tranches rallied last week in the wake of the new financing and the commitment not to raise more debt this year, investors are sitting on more than US$1bn of paper losses four months after the deal.
Cautious approach
The negative sentiment towards the company – and the sheer weight of its debt burden – led to a cautious approach from bankers on the latest financings. The bonds came with concessions to Oracle’s existing curve to entice investors and there was no greenshoe on the mandatory convertible preferred.
“The issue is that there is so much Oracle paper around and everyone owns it so that is negative from a technical perspective, so it may not trade to what its fundamentals may imply,” said the portfolio manager. “We would not look for it to tighten to its comps.”
Oracle is not the only company spending huge sums to develop AI. Last week, Google's parent Alphabet said it planned to double its capital expenditure this year and could spend as much as US$185bn, while Amazon announced capex of US$200bn for 2026. The previous week, Meta Platforms said its capex could almost double this year to as much as US$135bn.
“The capex increases from the hyperscalers have been astounding and our expectation is that it is going to continue,” said Tom Murphy, senior portfolio manager and head of investment-grade credit at Columbia Threadneedle Investments, who said the Oracle fundraising was a positive step.
“It gives them a runway for the year, after which we will have to extrapolate out what their funding needs are and what that means for their balance sheet,” he said. “But this did take away the Sword of Damocles for them – at least for 2026.”
Goldman Sachs led the bond offering and Citigroup led the equity component.
For details of the US$25bn bond deal see the Bonds section. For details of the US$20bn at-the-market programme and US$5bn mandatory convertible preferred see the Equities section.
Additional reporting by Sudip Roy and Alex Chambers