Oracle's data-centre lenders are stuck with $18 billion they cannot sell.
Reuters reported on 18 September, citing the Financial Times, that about $18 billion of loans tied to a data centre leased to Oracle in New Mexico has come under pressure.
Banks including Santander and Jefferies quoted the debt at 89 to 91 cents on the dollar.
The site is Project Jupiter, a 1,400-acre campus in Dona Ana County, built under Oracle's agreement to supply computing capacity to OpenAI. The initial plan called for 2.2 gigawatts of gas turbines.
The FT reported growing local opposition over water supply and air quality. Efforts to sell the debt to broader investors have stalled amid concerns about Oracle's rising borrowing and weakening creditworthiness. Reuters said Oracle, Santander and Jefferies did not respond to requests for comment.
A quote of 89 to 91 cents means investors want a discount to hold the loan. The report does not say whether they are pricing credit or construction risk, local opposition, or the difficulty of selling the paper on.
For buyers, the contract point is simple. Delivery can sit with a project company rather than the vendor whose name is on the contract.
If committed capacity is not built on schedule, what does your contract actually give you?
Sources
Our file on Oracle
- 5 Nov
Oracle dropped an estimated $7 billion deal to rent AI chips to Tencent, the FT reported. US officials had raised concerns.
- 3 Nov
Oracle set a $20 billion limit on new borrowing until 2030. A week later it offered bonds worth half that limit.
- 3 Nov
Oracle NetSuite user Brennan Industries says AI builds up to five ERP apps a day. ERP architects maintain that code.
- 2 Nov
Microsoft, Oracle and three peers cut buybacks 83% to $13.6bn. AI spending is eating their cash, a Reuters analysis found.
- 2 Nov
Erasmus University's move from SAP to Oracle is 70% over budget, at €20.2m. A one-year delay cost €4.5m of that.
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