Oracle shares rise more than 3% pre-market! Launching $25 billion bond issuance, planning to raise funds in eight tranches, going all out to boost cloud infrastructure.

Oracle shares rise more than 3% pre-market! Launching $25 billion bond issuance, planning to raise funds in eight tranches, going all out to boost cloud infrastructure.

In order to seize the high ground of artificial intelligence computing power, software giant Oracle has officially launched a massive financing plan, aiming to raise up to $50 billion through a combination of bonds and equity to support its aggressive cloud infrastructure expansion strategy.

According to Bloomberg, Oracle officially began issuing U.S. dollar bonds on Monday, with the expected bond issuance amount between $20 billion and $25 billion. Boosted by a clearer financing path, Oracle’s stock price rose more than 3% in pre-market U.S. trading, temporarily alleviating market concerns about how the company would fund its capital expenditures.

According to the statement, Oracle plans to raise half of the required funds for the year through a single bond issuance, and has pledged not to issue additional notes within the year, with the remaining funding gap to be filled through equity-related tools and common stock offerings. Ratings agency Fitch has affirmed Oracle’s long-term issuer default rating at BBB.

However, this move also places its balance sheet under the spotlight. As one of the largest corporate bond issuers outside the financial sector, Oracle’s outstanding debt currently stands at about $95 billion. Against a backdrop of high interest rates, such a large-scale debt expansion has prompted Wall Street to scrutinize the company’s cash flow pressures and the fragility of its financial structure.

Eight-Part Bond Issuance Secures Long-Term Funding

Bloomberg, citing insider sources, revealed that the bond issuance will be divided into eight parts, with maturities ranging from 3 to 40 years. For the longest 40-year bonds, the preliminary price guidance shows their yield will be about 2.25 percentage points higher than U.S. Treasury yields.

This issuance is managed by major Wall Street banks including Bank of America, Citigroup, Deutsche Bank, Goldman Sachs, HSBC Holdings, and JPMorgan Chase.

Oracle made it clear in the statement that this bond issuance is a one-time move, intended to cover half of the annual financing plan, providing instant liquidity support for the company and aiming to stabilize investor expectations by securing long-term funding.

Aggressive Expansion to Meet AI Giants' Needs

The core driving force behind Oracle’s massive fundraising stems from the explosive growth demand for its cloud infrastructure business. The company is attempting to transform from a traditional database software supplier into a heavy-asset cloud infrastructure giant, vying to compete with Amazon AWS and Microsoft Azure.

According to Bloomberg, the funds raised will be used specifically to build additional data center capacity to meet the needs of enormous contracts signed by key clients including AMD, Meta Platforms, Nvidia, OpenAI, TikTok, and xAI.

In particular, the partnership with OpenAI has become a significant driver of Oracle’s capital expenditures. To fulfill the contract, Oracle needs to purchase tens of thousands of expensive GPU chips and build supporting facilities. This change in business model has forced Oracle to shift from a “light-asset” model to a capital-intensive “heavy-asset” model.

“Bonds and Equity Twin Approach” Financing Mix

To balance the debt burden, Oracle has designed a diversified financing structure. In addition to the above-mentioned $20 billion to $25 billion bond issuance, the remaining funds will come from equity financing.

Media reports state the equity financing portion includes mandatory convertible preferred securities, as well as a market equity program as large as $20 billion. Bloomberg Intelligence analysis points out that although this hybrid financing plan has somewhat alleviated market concerns about funding sources and clarified the funding path for data center construction, it has not fully resolved investor worries over long-term returns.

Wall Street Concerns and Short Seller Warnings

Although the pre-market stock price rise reflects short-term optimism about the financing plan materializing, doubts remain. Well-known short seller Michael Burry recently disclosed that he is shorting Oracle, criticizing its “unnecessary heavy-asset expansion.” He believes Oracle lacks the core business moat of other tech giants and has extremely low tolerance in its financial structure; if AI demand falls short of expectations, the company will face enormous risks.

Additionally, according to Bloomberg citing TD Cowen’s analysis, due to concerns over Oracle’s financing ability, some banks had previously tightened loan support for its data center projects, which may be the direct reason forcing Oracle into large-scale financing in the bond and equity markets.

Analysts note that while the financing plan temporarily eases the risk of running out of liquidity, Oracle’s free cash flow has turned negative and this situation may persist for years. The focus in the market is on whether loss-making startup clients like OpenAI can afford to pay contract bills worth hundreds of billions of dollars over the long term—this will determine the ultimate outcome of Oracle’s high-stakes gamble.

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