Oracle-linked New Mexico data center debt faces pricing pressure
A large debt package backing an Oracle-leased data center in New Mexico is coming under pressure as banks struggle to place the loans with a wider investor base. The financing is tied to a major AI infrastructure project connected to OpenAI and sits against a backdrop of heavier Oracle borrowing and weaker credit metrics.
Highlights
- Project Jupiter’s $18 billion Oracle-linked loans are being quoted at 89 to 91 cents on the dollar due to concerns over Oracle’s creditworthiness.
- Banks including Santander and Jefferies face difficulty syndicating the Project Jupiter debt, forcing them to retain more exposure on their balance sheets.
- Oracle forecasts up to $95 billion in capital expenditure for fiscal 2027 and anticipates $25 billion in customer repayments, amid a credit rating just above junk.
Loan sale strains at Project Jupiter
As reported by Reuters, citing the Financial Times, about $18 billion in loans tied to the Oracle-leased Project Jupiter campus in Doña Ana County are being quoted at 89 to 91 cents on the dollar by syndicate banks including Santander and Jefferies.The 1,400-acre site is part of Oracle's broader agreement with OpenAI to provide AI computing capacity. The project secured the $18 billion loan package from a consortium of banks late last year to start construction, but efforts to sell the debt more widely have stalled amid concerns about Oracle's rising borrowing and weakening creditworthiness.
Oracle, Santander and Jefferies do not respond to Reuters requests for comment.
AI infrastructure push raises financing scrutiny
The New Mexico campus forms part of Stargate, a $500 billion initiative to build AI infrastructure across the U.S., led by OpenAI, SoftBank Group and Oracle. The scale of that buildout is increasing attention on how major computing projects are being funded and distributed across bank and investor balance sheets.Oracle's corporate credit rating sits one notch above junk after an S&P downgrade in July, and the Financial Times says banks are now forced to retain more Oracle-linked project debt on their balance sheets than initially planned. Oracle is also ramping up spending to expand its AI infrastructure footprint, forecasting up to $95 billion in capital expenditure for fiscal 2027 while expecting customer repayments of up to $25 billion.
In our earlier coverage of Project Jupiter’s $18 billion loan package for Oracle’s New Mexico data-centre campus, we noted that the debt was trading around 89–91 cents on the dollar as investors grew wary of delays and Oracle’s weakening credit profile. We also highlighted how permitting hurdles, lawsuits and local political opposition were adding regulatory uncertainty and making it harder for banks to distribute the loans more widely.
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