OFSS shares fall 6.5% as report says Oracle’s $18-billion data centre debt under pressure

As per the latest business developments, Shares of Oracle Financial Services Software declined 6% on September 21 after the Financial Times noted on Friday that around $18 billion in loans tied to an Oracle-leased data centre in New Mexico has come under pressure, with loans quoted at 89 to 91 cents on the dollar by syndicate banks including Santander and Jefferies.

The development comes amid concerns that growing local opposition to the project over fears it would impact water supply and air quality could derail Oracle's massive AI infrastructure build-out, the FT note stated.

The 1,400-acre "Project Jupiter" campus in Doña Ana County is part of Oracle's broader agreement with OpenAI to provide AI computing capacity.

At 9:52 am on September 21, OFSS shares were trading 6.5% softer at Rs 11,131 apiece. Oracle's stake in Indian unit is valued at Rs 70,000 crore ($7.3 billion).

The project secured $18 billion in loans from a consortium of banks late last year to kick-start construction, according to media notes.

Efforts to sell the debt to a broader pool of market participants have stalled amid concerns over Oracle's rising borrowing and weakening creditworthiness, the Financial Times stated.

Oracle's corporate credit rating sits one notch above junk following a downgrade from S&P in July. Banks were now forced to hold more Oracle-linked project debt on their balance sheets than initially planed, the Financial Times stated.

Oracle has been ramping up spending to finance its expansion into AI infrastructure, while its rising debt load has drawn increasing investor scrutiny.

Project Jupiter was initially set to be powered by 2.2 gigawatts of gas turbines, but the state land office blocked a request to run a natural gas pipeline to the data center, the note stated.