Oracle Corporation announced its full calendar year 2026 plan to fund the expansion of its Oracle Cloud Infrastructure business on Sunday 1 February, to raise money for additional datacentre capacity to support the demand from customers including AMD, Meta, NVIDIA, OpenAI, TikTok, xAI and others.
Its financing plans included a US$25 billion bond issue on Monday 2 February which was well received, another US$25 billion in equity financing.
“We expect an initially constructive bond reaction, but remain cautious longer term given this is a step in a multi-year, capital-intensive build-out,” wrote Lindsay Tyler and David Hamburger, analysts at Morgan Stanley. “We’ve pondered how ORCL’s considerable funding needs over the next three years may test the depths of different fixed-income markets. With that, we’ve considered the potential for equity or equity-like solutions, but our read was that the company would leave them as levers if needed down the road, i.e., if-and-when fallen angel risk intensified. However, the company is being more proactive earlier on than we thought it would be. The company appears to recognise that its move into GPUaaS represents a transformative, capital-intensive shift, requiring incremental equity to support the balance sheet without overextension.”
Fitch Ratings assigned the benchmark size unsecured bonds a ‘BBB’ rating with a ‘stable’ outlook.
“The ratings reflect Oracle’s near-term elevated capex for AI compute infrastructure,” wrote primary rating analyst, Rahul Bhojwani. “Multi-year commercial contracts obligate Oracle to provide AI compute capacity to customers. Fitch expects Oracle to raise incremental capital through debt and equity to supplement internal free cashflow (FCF) generation. For calendar year 2026, Oracle expects to raise $45 billion-$50 billion in cash through the new notes and equity issuances.”
Oracle’s combination of equity-linked and common equity issuances are expected to include an initial issuance of mandatory convertible preferred securities, representing a modest portion of the overall equity funding, as well as a newly authorised equity programme of up to US$20 billion, flexibly, over time at prevailing market prices, based on market conditions and capital needs.
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