Key facts
- About $18 billion in loans tied to an Oracle-leased data center in New Mexico are under pressure.
- The loans are quoted at 89 to 91 cents on the dollar by syndicate banks.
- The data center campus, known as 'Project Jupiter,' is located on 1,400 acres in Doña Ana County, New Mexico.
- The project secured $18 billion in loans from a bank consortium late last year.
- Efforts to sell the debt to a broader investor pool have stalled.
- Oracle's corporate credit rating is one notch above junk following an S&P downgrade in July.
Approximately $18 billion in loans associated with an Oracle-leased data center in New Mexico have come under pressure, according to a Financial Times report. Syndicate banks, including Santander and Jefferies, are quoting these loans at 89 to 91 cents on the dollar. The 1,400-acre "Project Jupiter" campus in Doña Ana County is intended to provide AI computing capacity as part of Oracle's agreement with OpenAI.
The project initially secured $18 billion in loans from a bank consortium late last year. However, attempts to distribute this debt to a wider investor base have reportedly stalled. This is attributed to concerns regarding Oracle's increasing borrowing costs and a perceived weakening of its creditworthiness. Oracle's corporate credit rating was downgraded by S&P in July, placing it one notch above junk status. Consequently, banks are now holding more of this Oracle-linked debt on their balance sheets than originally planned.
The New Mexico data center is part of the larger "Stargate initiative," a $500 billion effort to build AI infrastructure across the U.S., involving OpenAI, SoftBank Group, and Oracle. Oracle has been increasing its spending to finance its expansion into AI infrastructure, leading to a rising debt load that is drawing increased investor scrutiny. The company has forecast capital expenditures of up to $95 billion for fiscal year 2027, though it anticipates receiving up to $25 billion in repayments from customers.