Oracle Pays Up to Raise $20 Billion

AUSTIN, Tex., Nov. 2 — OracleOracle agreed on Monday to sell $10 billion of new shares and $10 billion of bonds, and its stock fell 8.76 percent, to $119.22.ORCLNYSE119.79▲3.69+3.2%Oracle · Monday’s session The bonds pay 7 to 8.65 percent, priced at 2.40 to 3.35 percentage points over Treasuries, according to the final terms Oracle filed with the Securities and Exchange Commission at 5:28 p.m.

The offerings add up to the $20 billion to which Oracle said on Oct. 28, at its investor day, it would limit its new money from the capital markets through fiscal 2030, expecting $10 billion in equity and $10 billion in debt, not counting refinancing. Its documents do not say how much of Monday’s debt counts against that limit; the notes prospectus lists repayment of debt among the possible uses of the money. Since the close on Oct. 28, Oracle’s shares have lost 17.52 percent.

Oracle priced the new shares at $116 each, 86.2 million of them, for net proceeds of about $9.9 billion, it said in a statement at 10:09 p.m. Monday; no final prospectus for the stock was on the SEC’s EDGAR system at 6:02 a.m. Tuesday. That price is 11.2 percent below Friday’s close of $130.67, the last sale price cited in Oracle’s prospectus, and 2.7 percent below Monday’s. At that count the new shares add 2.85 percent to the 3,023,726,695 Oracle had outstanding on Aug. 31.More SharesUp to 31.2 million more shares could be issued on conversion of the 6.50 percent mandatory convertible preferred stock Oracle issued in February, the prospectus says. Oracle has agreed not to sell more common stock for 60 days without the consent of BofA Securities, which represents the underwriters, with some exceptions.

The bonds come in five pieces: $2 billion due 2029 at 7.000 percent, $1.75 billion due 2031 at 7.450 percent, $2.25 billion due 2033 at 7.850 percent, $2.5 billion due 2037 at 8.000 percent and $1.5 billion due 2046 at 8.650 percent. Together they will cost Oracle about $777 million a year in interest. Both offerings are expected to close on Wednesday, Nov. 4, subject to customary closing conditions, Oracle said. The money is for “general corporate purposes, which may include capital expenditures, repayment of indebtedness, future investments or acquisitions and payment of cash dividends on or repurchases of our common stock,” the prospectus says.

The Price

Oracle’s 2029 notes priced at 240 basis points over the Treasury benchmark; on Oct. 29, against the same Treasury note, Microsoft’s 2029 notes priced at 35.Basis PointsA basis point is a hundredth of a percentage point. Oracle’s 2029 notes yield 7.062 percent, against 4.662 percent on the Treasury note due October 2029; Microsoft’s yield 5.036 percent. On notes due 2046, Oracle paid 335 and Microsoft 85. Microsoft is rated Aaa by Moody’s and AAA by S&P. Oracle expects Baa2 from Moody’s, with a negative outlook, BBB− from S&P and BBB from Fitch. Alphabet, rated Aa2 and AA+, also borrowed on Monday, pricing €6 billion of notes.

Oracle is also paying more than it did itself nine months ago. When it sold $25 billion of notes in February, its 2029s priced at 95 basis points over Treasuries and its 2046s at 170. That term sheet expected a BBB from S&P, with a negative outlook. Oracle had said on Feb. 1 that it “does not expect to issue additional bonds during calendar year 2026 beyond this transaction.”

Shareholders pay for Monday’s money in dilution, at a discount; bondholders are paid for it in coupons. Oracle’s case is that the spending turns into cash. At its investor day it said it expected capital spending to peak in fiscal 2027 and 2028 and step down in fiscal 2029, when free cash flow would be at least $30 billion, and that vendor financing, customer-provided hardware and customer prepayments would cut the cash it needs up front.The PledgeOracle also said on Oct. 28 that free cash flow would turn positive in the second half of fiscal 2028, and that net debt would be below 3.5 times adjusted EBITDA in fiscal 2029. Its net debt, by its own definition, counts vendor financing and leases. The $20 billion cap comes on top of the $20 billion of stock Oracle sold through an at-the-market program in its quarter ended Aug. 31. Its notes prospectus counts $125.3 billion of senior unsecured borrowings on Aug. 31, before Monday’s, and says Oracle expects “to incur additional borrowings or other liabilities under vendor financing, leases and other financing arrangements.”

The Sell-Off

Other AI-infrastructure stocks fell with Oracle on Monday: the PHLX Semiconductor index lost 3.37 percent, Intel 8.80 percent after 28.58 percent on Friday, AMD 7.52 percent, CoreWeave 8.60 percent, Nebius 8.27 percent and Super Micro 7.62 percent. The Dow Jones industrial average rose 0.41 percent, and Amazon 2.20 percent.

On Tuesday the selling reached Seoul and Taipei, where the Kospi and the Taiex each closed 3.59 percent lower, and SK hynix fell 5.03 percent and Samsung Electronics 4.15 percent. Foreigners sold a net 1.5 trillion won of Kospi shares, Yonhap reported. “Concerns about profitability of AI investments persist,” Kim Seok-hwan, an analyst at Mirae Asset Securities, said, as quoted by Yonhap. “A sharp drop in chip shares in the U.S. stock market on the first trading day of November weighed heavily on the Korean market.”

Concerns about profitability of AI investments persist.

Contract prices for PC memory are still rising, if more slowly. “PC DRAM contract prices keep rising in the fourth quarter, though gains are narrowing amid tense negotiations,” TrendForce, the market researcher, wrote in a summary of its October contract-price report.

The chip, server and network makers report next. AMD and Super Micro hold calls at 5 p.m. Eastern tonight, and Arista and Astera Labs at 4:30 p.m. Qualcomm, at 4:45 p.m., and Arm, at 5 p.m., follow on Wednesday, the day both of Oracle’s offerings are due to settle.