Bond, debt bond: Investors shaken, not stirred by Oracle’s borrowing spree sue Big Red
- Reference: 1768504718
- News link: https://www.theregister.co.uk/2026/01/15/oracle_faces_class_action_over/
- Source link:
In September, Oracle raised [1]$18 billion in debt bonds to help fund massive datacenter investments aimed at meeting surging demand from AI model builders and enterprise customers.
The Securities and Exchange Commission filings said Big Red sold the bonds to raise cash for a number of activities, including capital expenditures. The move followed Oracle's first-quarter results earlier in the month, when it stunned the stock market by announcing it had bagged cloud contracts, signed but not yet paid for, worth $455 billion. This reportedly included a [2]$300 billion deal with OpenAI .
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However, weeks later, [4]media reports said Oracle planned to launch another $38 billion debt offering to fund data centers in Wisconsin and Texas that would support the Oracle–Open AI agreement.
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In a filing which is yet to be reviewed by the county clerk, a class action lawsuit led by the Ohio Carpenters’ Pension Plan alleges that the initial $18 billion bond offering was accompanied by “false and misleading” documents which “omitted to state that, at the time of the Offering, Oracle would require a significant amount of additional debt to build the AI infrastructure ... which would ultimately bring the creditworthiness of these bonds into question.”
Oracle has declined the opportunity to comment.
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The claim says that the bond market’s reaction to Oracle’s additional debt was “swift and bracing.” “Oracle’s Senior Notes began to trade with yields and spreads similar to lower-rated issuers as investors began to demand higher yields due to perceived credit risk,” the suit alleges. As a result, bond-holders bringing the class action suit “suffered significant losses and damages”.
[8]Birmingham pauses Oracle relaunch to get staff on board
[9]Oracle's new AI-enhanced support portal leaves users fuming
[10]Bank of England's Oracle cloud migration bill triples as project grinds on
[11]Oracle just signed one mystery customer that will double its cloud revenue in 2028
Others have acted on apparent concerns over Oracle's approach to debt. In November last year, financial traders piled into Oracle’s credit-default swaps, a financial instrument which offers insurance against a debt default. The price of [12]Oracle CDS for five years tripled in the months leading up to November, an indication of a perceived increase in risk.
It is worth noting that Oracle retains around $20 billion in cash reserves and accrues around $57 billion in annual revenue. Few would anticipate it defaulting on its debts.
Oracle is in the middle of a [13]multi-trillion-dollar race among tech giants to build the datacenters required to sate the expected appetite for AI models among businesses and consumers. Google owner Alphabet, for example, was set to [14]triple capex between 2023 and 2025 to reach $93 billion.
Oracle is not the only company to dip into the debt market to fund its binge. In October, Facebook, WhatApp and Instagram owner Meta [15]sold $30 billion in bonds to build out its infrastructure estate and support its ambition in AI markets. Some of these won't mature for 40 years. ®
Get our [16]Tech Resources
[1] https://www.theregister.com/2025/09/25/oracle_18_billion_debt/
[2] https://www.theregister.com/2025/09/11/openai_reportedly_on_the_hook/
[3] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=2&c=2aWlxltVzn-LdNQvyUi9sggAAAw8&t=ct%3Dns%26unitnum%3D2%26raptor%3Dcondor%26pos%3Dtop%26test%3D0
[4] https://www.bloomberg.com/news/articles/2025-10-23/record-38-billion-debt-sale-nears-for-oracle-tied-data-centers
[5] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aWlxltVzn-LdNQvyUi9sggAAAw8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[6] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=3&c=33aWlxltVzn-LdNQvyUi9sggAAAw8&t=ct%3Dns%26unitnum%3D3%26raptor%3Deagle%26pos%3Dmid%26test%3D0
[7] https://pubads.g.doubleclick.net/gampad/jump?co=1&iu=/6978/reg_onprem/systems&sz=300x50%7C300x100%7C300x250%7C300x251%7C300x252%7C300x600%7C300x601&tile=4&c=44aWlxltVzn-LdNQvyUi9sggAAAw8&t=ct%3Dns%26unitnum%3D4%26raptor%3Dfalcon%26pos%3Dmid%26test%3D0
[8] https://www.theregister.com/2026/01/13/birmingham_oracle_delay/
[9] https://www.theregister.com/2025/12/23/oracles_new_aienhanced_support_portal/
[10] https://www.theregister.com/2026/01/09/bank_of_england_oracle/
[11] https://www.theregister.com/2025/07/01/oracle_cloud_ai/
[12] https://www.theregister.com/2026/01/14/ai_investment/
[13] https://www.theregister.com/2026/01/14/ai_investment/
[14] https://www.theregister.com/2025/10/30/alphabet_capex/
[15] https://www.theregister.com/2025/10/31/meta_launches_30_billion_bond/
[16] https://whitepapers.theregister.com/
There's massive demand for 'free' AI. You are getting it even if you didn't ask. Not so much for paid-for AI. Maybe very little for expensive AI. To balance the books it looks like it's going to have to be very expensive AI.
Maybe if Nvidia use technology to re-invent Grove's law of halving prices every year or so and coders (AI coders?) find away of compressing code. But it looks like its going the other way atm. Hence icon.
> You are getting it even if you didn't ask.
Then I didn't demand it.
You fool, do not believe that you own your machine cycles.
Your Masters, among them the High Ones of The Web Masters, the Brotherhood of The Browsers, and the Exalted Ones of the Commercial Operating System, have demanded that the AI be in implanted in the processing they so graciously allow you to borrow.
Well, I accept I'm a fool. But for an entirely different raft of reasons :D
AFAIK I'm good with the Elders of the Internet (icon)!
Yes, we are doomed.
Only today, Rachel Reeves (UK Chancellor of the Exchequer) dropped into conversation that AI will be helping in the UKs future growth.
Also of note (one i can remember) was that BT is to reduce its workforce by 55,000 with 10,000 due to AI. Doing a quick search there are at least 8 others taking this approach.
As you have said, no one wants it.
I do recall in the 1980's, before the internet, jokes were passed around on bits of paper. One was where the workers at the bottom said the new system stinks and is a crock of shit. By the time it got to the CEO, the phrase was that is it very strong and promotes growth. That sums AI up perfectly.
BT has been shedding staff for the last 40 years.
Hey, if the AI bubble bursting also destroys Oracle...
Kind of a no-lose scenario, don't you think?
They won't be missed.
Nominated for...
...Best Article Title!
Re: Nominated for...
It almost beats [1]this one .
El Reg vultures, you deserve one of these for all your amazing titles (and articles) --->
[1] https://www.theregister.com/2025/08/27/vmware_submarine_software_licenses
Realised losses?
Technically bond holders won't have suffered any losses. They'll still get interest payments, and there's no immediate threat of the bonds not being paid at term.
Bond sellers however... Made their own choices. Good luck to them!
"Oracle is in the middle of a multi-trillion-dollar race among tech giants to build the datacenters required to sate the expected appetite for AI models among businesses and consumers.”
Sorry but just what appetite? Well certainly none from consumers, maybe some lukewarm demand from businesses which have jumped onto the hype bandwagon and now aren't sure how to get off without looking like idiots?
Because it does strike me that the only people pushing this narrative of ‘increasing demand’ are those who have a massive vested interest in selling it - despite strong evidence that it doesn’t work anywhere near as well as claimed, doesn't produce the promised savings, isn’t wanted and isn’t needed by the actual end users. By actual users, I mean the people who actually do the work, that makes a profit for the company, not the C-suite drones who will sign up for anything for a ’nice lunch’.
Alas it is the latter who make the decisions and corporate policy.
We’re doomed; aren't we?