Why Oracle's 'jumbo' AI-fueled bond deal is so unusual

By Emily Bary

Analysts note that it's unconventional for technology companies to offer bonds that mature in 40 years given how quickly tech can evolve

Some of Oracle's newly issued bonds mature in 2065.

As Oracle Corp. looks to facilitate its big ambitions in the cloud, it's turning to the bond market in a way that Wall Street experts said could be perhaps best described as unconventional.

The company this week issued an $18 billion bond offering with different tranches, ranging from issues that mature in 2030 to those that mature in 2065. It's a sign that Oracle (ORCL) is serious about dramatically expanding data-center capacity to support the demands of customers like OpenAI - but also indicative of the debt financing needed to prop up the AI buildout.

Oracle's bond offering saw "incredible" interest on Wall Street, noted Dave Novosel, a senior investment analyst at Gimme Credit. Bloomberg News reported that demand "peaked at nearly $88 billion" for the $18 billion offering. When order books are that full, bankers are often able to cut the premium over comparable Treasury rates offered to investors, making it cheaper for the company to borrow money.

Bank of America strategists pointed out that the "jumbo" Oracle deal helped lift new-issue supply for investment-grade deals "to historically elevated levels this week."

See also: Demand for investment-grade bond ETFs surges as Oracle pushes up supply of new debt

The high interest in Oracle's offering reflects that "the AI story is thriving," according to Novosel, but he also sees a "quandary" facing Oracle investors - both in the bond and equity markets. Oracle stunned Wall Street with $455 billion of remaining performance obligations when it posted earnings earlier in September. But an issue is that "when that gets booked to revenue is uncertain," Novosel added.

Oracle didn't return a request for comment on the bond offering.

The need for a debt offering was no surprise to Wall Street as Oracle reported almost $6 billion in negative free cash flow across its past four reported quarters, so it was expected that the company would have to tap the bond markets to support big new cloud deals with OpenAI and other customers.

However, the inclusion of bonds that mature in 40 years struck some on Wall Street as unconventional.

"We've seen 40-year deals, but they're typically with companies with staying power," such as Coca-Cola Co. (KO), said Dave Novosel, a senior investment analyst at Gimme Credit.

Those sort of maturities are "unusual" with technology, because "who knows who will be around in 40 years?" Novosel told MarketWatch.

Read: Why the $300 billion Oracle-OpenAI deal could be fueling an AI bubble

Baird managing director Ted Mortonson described the deal as creative and "almost insulting," because "you can't invest in technology 40 years out."

He told MarketWatch his clients are worried about a potential debt bubble over the next two years as "the assumptions on debt are believe-in-the-dream assumptions."

As for Oracle, Gimme Credit's Novosel is still positive on the company's bonds and its credit story over time, despite the "near-term negative" situation with free-cash flow.

-Emily Bary

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09-25-25 1727ET