Oracle faces carry-cost payments on New Mexico data centre if power delays persist

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Oracle New Mexico data centre risk

Highlights

Oracle must make carry-cost payments covering debt interest and Blue Owl returns if the New Mexico data centre misses its completion deadline due to power delays.
Over $18 billion in construction debt led by BNP Paribas, Goldman Sachs, MUFG, and SMBC remains largely undispersed among institutional investors as concerns grow about Oracle’s credit profile.
Loans for Project Jupiter have traded below 90 cents on the dollar, reflecting increased financing pressure and uncertainty over Oracle’s $300 billion OpenAI-driven data centre strategy.

Contract terms and project timeline

As reported by Financial Times, citing Bloomberg on the force majeure notice, Oracle has told the developer of Project Jupiter, a Blue Owl Capital unit, that power supply issues affect the New Mexico site, according to people familiar with the matter. Under the contract, however, Oracle still remains liable to make carry-cost payments in place of rent if the project is not ready by the deadline, with those payments covering debt interest in full and a defined return for Blue Owl funds that have invested billions of dollars.

The 1,400-acre campus in Doña Ana County is already under construction, but permitting delays have emerged after rising local opposition. People familiar with the matter said the power delivery risk sits with Oracle rather than investors, leaving the company potentially paying for a facility that lacks the electricity needed to operate.

One person also said there is disagreement over whether a force majeure clause can be invoked before a project reaches its scheduled completion date. Oracle said the notices do not establish a project delay or alter delivery expectations, adding that Project Jupiter remains on its planned schedule and that the company stays committed to New Mexico.

Financing pressure and wider market implications

A consortium of more than 20 banks, led by BNP Paribas, Goldman Sachs, MUFG and SMBC, provided $18 billion of construction debt for the project late last year. Efforts to distribute that debt more broadly among institutional investors have stalled, however, as concerns grow about Oracle’s credit profile after heavy borrowing, leaving banks with larger exposures to Oracle-linked project debt than first planned, according to people familiar with the matter.

Loans tied to the project have also come under pressure and have been quoted below 90 cents on the dollar by banks, the Financial Times previously reported. The four-year construction debt was priced at 2.5 percentage points above the Secured Overnight Financing Rate, with an optional two-year extension.

Project Jupiter sits at the centre of Oracle’s strategy to expand as an AI data centre operator through its $300 billion OpenAI contract. Blue Owl said the force majeure notice does not change the financial commitments to the multiyear project, while BNP Paribas, Goldman Sachs and SMBC declined to comment and MUFG did not respond to a request for comment.

In our earlier coverage of Oracle’s force majeure notice tied to Project Jupiter, we outlined how power-supply delays at the New Mexico AI data center could test contract protections and shift financial risk between Oracle, developers, and investors. We also noted that the situation was already influencing lender scrutiny and pricing across other large U.S. AI infrastructure financings as execution risk and tighter funding conditions come into sharper focus.

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