Oracle Corp. priced $20 billion of new stock and bonds to pay for its artificial-intelligence data-center buildout, paying coupons of as much as 8.65% on the debt, a sign of how much investors now demand to finance the AI arms race.
The Austin, Texas, software and cloud company sold about 86.2 million shares at $116 apiece, raising roughly $9.9 billion after fees, and $10 billion of senior notes in five maturities, it said late Monday. Both offerings are set to close Wednesday, and neither depends on the other.
Junk-like coupons on high-grade paper
The bonds include $2 billion of 7% notes due 2029, $1.75 billion of 7.45% notes due 2031, $2.25 billion of 7.85% notes due 2033, $2.5 billion of 8% notes due 2037 and $1.5 billion of 8.65% notes due 2046. Those rates are unusually high for an investment-grade borrower. S&P Global cut Oracle in July to BBB-minus, one notch above junk, and the cost of insuring its debt against default has climbed to levels more typical of high-yield issuers. Oracle carried about $125 billion of debt as of Aug. 31.
BofA Securities was sole global coordinator, with Wells Fargo, Citigroup, BNP Paribas, Deutsche Bank, J.P. Morgan, PNC, Goldman Sachs, HSBC and SMBC Nikko among the joint bookrunners.
Shareholders pay the bill
Oracle laid out the plan at its investor day last week, when it forecast at least $225 billion of revenue in fiscal 2030 and said this $20 billion would be its only additional capital-markets funding for the fiscal 2027-to-2030 investment cycle. The rest is to come from vendor financing, customer-supplied hardware and customer prepayments, with positive free cash flow expected in the second half of 2028.
Investors sold anyway. The stock fell 8.8% on Monday to $119.22, leaving it down about a third this year, as the share sale diluted existing holders and the bond deal added to a debt load that has worried creditors all year. The new shares were priced below that close.
