Oracle-linked New Mexico data centre debt comes under pressure amid permitting risks

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Highlights

Project Jupiter loans linked to Oracle are priced at 89–91 cents on the dollar, reflecting investor concerns over construction delays and Oracle’s weaker credit profile.
Permitting obstacles, lawsuits over air quality, and blocked natural gas pipeline connections have stalled Project Jupiter, putting its initial November 2024 launch at least seven months behind schedule.
Oracle faces political risk in New Mexico, as gubernatorial nominee Deb Haaland threatens a data centre moratorium amid 65 per cent local opposition, potentially impacting the $300 billion OpenAI contract.

Debt pricing reflects project delays

As first reported by Financial Times, loans linked to Project Jupiter are privately quoted at 89 to 91 cents on the dollar by syndicate banks including Santander and Jefferies, according to people familiar with the matter. Healthy debt typically trades close to par, making the decline a sign of growing unease among investors over the project's timetable and execution risks.

The 1,400-acre data centre campus in Doña Ana County is central to Oracle's $300 billion contract with OpenAI to provide computing power. The project secured $18 billion of loans from a bank consortium late last year to begin construction, alongside billions of dollars in equity investment from Blue Owl.

Efforts to distribute the debt to a broader investor base are now stalling because of concerns over Oracle's heavy borrowing and weaker credit profile. Oracle's corporate credit rating sits one notch above junk after an S&P downgrade in July, and banks are being forced to retain more Oracle-linked project debt on their balance sheets than originally expected, the people said.

Last week, Oracle co-founder Larry Ellison cancelled a $7.5 billion share-trading plan without explanation. Oracle shares have fallen 50 per cent since the company unveiled its $300 billion OpenAI deal a year ago.

Local opposition clouds New Mexico build-out

Project Jupiter is facing strong resistance in New Mexico over its potential effects on water supply and air quality. The campus is initially planned to use 2.2 gigawatts of gas turbines, but the state land office blocks a request to run a natural gas pipeline to the site.

In April, Oracle says it will use Bloom fuel cells, which emit less sulphur and nitrogen oxides, but permission for a pipeline connection to feed those systems is also blocked. The project's air permit application is paused in August after lawsuits from two environmental groups, although a judge says on Thursday that the process can continue.

Political pressure is also increasing ahead of the state's November election. Deb Haaland, former U.S. interior secretary and New Mexico's Democratic gubernatorial nominee, says she will impose a data centre moratorium if elected and require developers to invest heavily in renewable energy for their sites.

State filings show Oracle donates more than $12,000 to Haaland's campaign in late August, though it remains unclear how any moratorium would affect the company's facilities. A recent Albuquerque Journal poll finds 65 per cent of residents oppose large data centre development, while 20 per cent support it. Market intelligence firm SynMax says Project Jupiter's initial phase is at least seven months behind schedule and had been expected to come online by November this year.

Our earlier article on Bathla Group’s stalled affordable-housing developments in Australia described how the developer, after entering administration, received a court-backed extension to keep dozens of unfinished sites active while it seeks fresh lender funding. We noted that project completion remained uncertain, with construction continuity relying on short-term financing and ongoing talks with lenders amid staff stand-downs and a large pipeline of incomplete sites.

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