Oracle's $18B data center debt faces pressure amid local opposition
What's the story
Oracle's $18 billion debt linked to a data center in New Mexico is facing pressure, the Financial Times reported. The loans are currently being quoted at 89 to 91 cents on the dollar by syndicate banks such as Santander and Jefferies. The development comes amid fears that rising local opposition over concerns of water supply and air quality could jeopardize Oracle's massive AI infrastructure expansion.
Project details
'Project Jupiter' campus in Dona Ana County
The 1,400-acre "Project Jupiter" campus in Dona Ana County is part of Oracle's deal with OpenAI to provide AI computing capacity.
The project got $18 billion in loans from a group of banks late last year to start construction.
However, attempts to sell the debt to a wider investor base have been stalled due to concerns over Oracle's rising borrowing and weakening creditworthiness.
Financial impact
Oracle's credit rating downgraded by S&P in July
Oracle's corporate credit rating is one notch above junk after S&P downgraded it in July.
This has forced banks to hold more Oracle-linked project debt on their balance sheets than they had originally planned.
The tech giant has been increasing its spending to fund its expansion into AI infrastructure, even as its growing debt load continues to attract investor scrutiny.