Oracle data center debt comes under pressure amid project concerns - FT

Approximately $18 billion of loans associated with Oracle's leased data center in New Mexico are experiencing pressure, according to the Financial Times. These loans, tied to Project Jupiter, a 1,400-acre data center campus, are currently quoted at 89 to 91 cents on the dollar by banks. The loans were provided by a consortium of banks for the construction of the project, including Santander and Jefferies.

However, efforts to distribute the debt to a broader investor base have hit a snag due to concerns over Oracle's growing borrowing and weakened credit profile. This has resulted in banks holding more debt related to the project than initially anticipated. Oracle's corporate credit rating has been downgraded by S&P to just above junk status, adding to the scrutiny of its debt load.

As the company increases spending on AI infrastructure to meet growing demand for artificial intelligence services, this debt pressure is intensifying. Additionally, Project Jupiter is encountering local resistance due to potential impacts on water supplies and air quality. The site's power infrastructure was initially planned to be sourced from 2.2 gigawatts of gas turbines, but New Mexico's state land office recently blocked a request to run a natural gas pipeline to the data center.

The convergence of financing challenges and uncertainty regarding the project's power supply could complicate the completion of the campus as originally intended. Oracle, Santander, and Jefferies have declined to comment on the matter.