Oracle's $18 Billion Data Center Debt Under Pressure

Loans backing Oracle's $18 billion Project Jupiter data center in Doña Ana County, New Mexico are trading at 89 to 91 cents on the dollar, signaling investor hesitation over the debt package. Syndicate banks including Santander and Jefferies are holding more of the debt than they anticipated, struggling to distribute it to a wider investor base as concerns mount over Oracle's rising debt levels and deteriorating credit profile.

Project Jupiter, a 1,400-acre campus, anchors Oracle's partnership with OpenAI to supply computing capacity for the Stargate initiative. Oracle secured the loan package late last year to commence construction. However, efforts to distribute the debt have stalled amid questions about Oracle's creditworthiness. In July, Standard & Poor's downgraded Oracle's corporate credit to one notch above junk status.

The financial strain reflects Oracle's aggressive capital deployment. The company forecasts approximately $95 billion in capital expenditure for fiscal 2027 against roughly $25 billion in expected customer repayments—a substantial gap that has become the focus of investor concern as the debt circulates.

The project faces additional headwinds from regulatory obstacles. The Green Chile Project, a 17-mile natural gas pipeline designed to supply Project Jupiter, has been delayed by nearly six months following a second permit denial from the New Mexico State Land Office. The pipeline's in-service date has been pushed to February 1, 2027. Land Commissioner Stephanie Garcia Richard cited insufficient benefits to state lands and expressed alarm over the project's environmental impact, stating that approval would burden New Mexico's water and natural resources with "extreme" demands and amount to "literally doubling down on dangerous emissions." The site was originally planned to operate with 2.2 gigawatts of gas-fired generation capacity.

Oracle, Santander, and Jefferies declined to comment.