Oracle saddles up with $18B debt amid AI infrastructure gamble

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. Railway crash AI hype train may jump the tracks over $2T infrastructure bill, warns Bain READ MORE According to Securities and Exchange Commission …

[Doctor Syntax]

I wonder what interest rates they got.

[Like a badger]

Fitch Rating have a list that's published. There's six tranches each in the range of $2-4bn with different maturities, with the longest tranche out to 2065, with coupons of 4.45 - 6.1%.

Whilst Oracle are currently (just) investment grade meaning Fitch BBB, this issue and the uncertain AI future means the rating agency mark the company outlook as negative, so any hiccups and Oracle will be issuing any more debt at BB, which is the top end of junk bonds. Perhaps most worrying is that some mugs are willing to lend $18bn of unsecured money for AI tulips, and chances are those mugs are people like pension funds.

https://www.fitchratings.com/entity/oracle-corporation-81874137#securities-and-obligations

Section 5, sort by "most recent".

[Doctor Syntax]

For what they're doing I think I'd want a short-duration at an interest rate that would nevertheless repay the loan a few times over before it matured. That way I might stand a chance of getting my money back before the bubble bursts and the whole thing collapses in a heap.

[Like a badger]

Oracle have enough recurring income from ERP and licensing that the AI bubble bursting won't harm them as much as some others?

[wolfetone]

We're told to put money in to a private pension by a Government who takes a fair chunk of NI out of my wage, and told that it will see me in retirement.

Then I will get to retirement and realise the private pension is fucking worthless because some dickhead decided AI was the future.

So why bother? I'm just going to spend my pension now and enjoy it, as tomorrow may never come.

[PCScreenOnly]

Or gets raided as it did under Blair and Brown, and maybe raided again in November by Rachel from Accounts

[Dabooka]

Not the same thing

Brown raided surplus form public sector pensions form those 'over performing'; sucked still of course.

Reeves is talking about raiding the tax free obligation to bring it down and keep more in the annuities, or pay a tax on what you decide to take out. Sucks even more but a clever way to force a draw down that probably means tax is liable on the income.

[ecofeco]

Great info. Thanks badger!

[trevorde]

Buy now, pay later

Just hope those AI companies can pay the piper when the bill is due, otherwise the market for super yachts is toast

[Kevin McMurtrie]

Re: Buy now, pay later

Execs never lose when they burn their company to the ground. They have preferred stock and severance packages. They can shuffle stock ownership to hide insider trading, and even sacrifice some shares to pretend like they were caught off guard. They can ask fools to fund a new project, and they get money again.

[Scene it all]

Over-expansion killed Pan Am, once the US's major international airline. They had invested in a large fleet of Boeing 747's in anticipation of a surge in traffic that did not materialize.

[Yet Another Anonymous coward]

But did Pan-Am own a government willing to bail them out in return for a small share?

[alain williams]

$18B - what is that is mega yachts ?

Can we have a new el-reg unit - a measure of money in terms of Larry style mega yachts.

[Anonymous Coward]

Re: $18B - what is that is mega yachts ?

I think the el-reg unit of measure for oracle debt should be in MIGs but that may be the old imperial unit of measure so we need a MIG to Super Yachts conversion factor.

[Roland6]

Re: $18B - what is that is mega yachts ?

As yacht seems to be a flexible term, I suggest an $18Bn mega yacht is probably something like an aircraft carrier ie. Why not have something you could land an executive jet on… (suspect achieving a 3000m runway for a 747-8 will be a bit tricky)

[steamnut]

First the invincible Intel falters. With this large gamble could Oracle go the same way? And, of course Microsoft is not as stable as you might think with enforced Win11 migration not going their way.

We do live in interesting times....

[Taliesinawen]

Inventing Value: Financial value vs social value?

Inventing Value: Financial value vs social value?

“One of the central mysteries of contemporary society is how the financial sector has managed to accumulate so much wealth and power. The heart of the answer is its capacity to create financial assets – stocks, bonds, options, derivatives, and the like – which investors are prepared to buy.

These assets have been naturalised: they have come to be seen as unproblematic objects with value in their own right and thus as just one more commodity that it is perfectly reasonable to buy and sell for profit. Yet in reality they are nothing more than promises, typically promises to deliver a revenue stream if certain conditions are satisfied, and highly tenuous promises at that.

The value of these assets, to put it differently, is socially constructed: it depends on the beliefs of investors about their value, which depend in turn on the stories that are told in order to encourage those beliefs.”

Rai stones are a form of physical asset whose value is derived primarily from collective social agreement, historical significance, and cultural context, rather than from intrinsic utility or material scarcity.”