Oracle Debt Hits $129.5B, Rating Near Junk Amid AI Capex Surge

Oracle's debt reaches $129.5B with a 4.3x EBITDA multiple, triggering S&P downgrade to BBB-. Rising CDS and bond yields reflect market concern over AI capex leverage.

Woofun AI reports that Oracle faces mounting debt pressure due to massive AI infrastructure commitments, including $260 billion in data center leases signed by the end of fiscal 2026. Current debt stands at approximately $129.5 billion, resulting in an EBITDA multiple of 4.3 times, significantly higher than peers like Alphabet and Microsoft. Standard & Poor's downgraded Oracle's credit rating to BBB- in July, placing it just above junk status. Moody's warned that leverage could approach 5 times during the construction phase, with S&P indicating further downgrades if the ratio exceeds 4.5 times.

Oracle anticipates capital expenditures peaking at $95 billion in fiscal 2027, with nearly half of its $638 billion remaining performance obligation tied to OpenAI-related contracts. Market anxiety centers on the mismatch between 15-to-19-year lease terms and shorter customer contract cycles. Since June, Oracle's stock has declined by about 50%, while bond yields rose to the 7%-8% range and credit default swap rates hit an 18-year high, signaling intensified scrutiny of its debt risk versus AI growth potential.