"Oracle has raised $18 billion in debt, which could help fund massive datacenter investments aimed at meeting surging demand from AI model builders and enterprise customers. According to Securities and Exchange Commission filings yesterday [PDF], Big Red sold the bonds to raise cash for a number of activities including capital expenditures. The move follows Oracle's first quarter results from earlier in the month, when it stunned the stock market by announcing it had bagged cloud contracts, signed but not yet paid for, worth $455 billion."
"In commentary attached to a research note, Moody's said it expects the costs to buy equipment and secure real estate and utilities "will be enormous." "Whether these will be financed through traditional debt, leases, or highly engineered financing vehicles, the overall growth in balance sheet obligations will also be extremely large," the analyst said. "We generally treat leases and many structured vehicles as debt-like obligations and include them in debt-related metrics.""
"In July, Moody's changed its outlook on Oracle to negative, although the rating itself stayed the same. The new outlook reflected "the expectation of continuing elevated leverage and increasingly negative free cash flow as Oracle materially ramps up its AI infrastructure business." Announcing Oracle's results, Safra Catz, then CEO, said the erstwhile database and application vendor had lined up cloud deals with OpenAI, xAI, Meta, Nvidia, AMD, "and many others.""
Oracle sold $18 billion in bonds to raise cash for capital expenditures and other activities, targeting massive datacenter investments to meet surging AI model-builder and enterprise cloud demand. The company reported signed but unpaid cloud contracts valued at $455 billion, implying substantial capacity needs. Moody's warned that procuring equipment, real estate, and utilities will be enormously costly and that financing will likely rely on debt, leases, or structured vehicles, treating many as debt-like obligations. The credit agency shifted Oracle's outlook to negative due to expected elevated leverage and increasingly negative free cash flow as AI infrastructure ramps.
Read at Theregister
Unable to calculate read time
Collection
[
|
...
]