Oracle Plans $10 Billion Bond Sale After Ruling Out Additional Debt in 2026

Key Facts

Oracle plans to sell $10 billion of bonds, including fixed- and floating-rate notes, Reuters reported on November 2, citing a filing with the U.S. Securities and Exchange Commission. The offering comes as the company funds an expansion of its cloud infrastructure to meet contracted customer demand. The announcement puts the borrowing plan against the backdrop of earlier statements by the company that it did not expect to issue additional debt during 2026. In February, Oracle expected to raise $45 billion to $50 billion in gross cash proceeds during the calendar year through a mix of debt and equity. It then said in its June results that it did not expect to issue additional debt that year. The November offering puts the financing of cloud expansion under review against those earlier expectations.

In February, Oracle said the funding would go toward building additional capacity to meet contracted demand from major Oracle Cloud Infrastructure customers. It named AMD, Meta, NVIDIA, OpenAI, TikTok and xAI among those customers. It also appointed Goldman Sachs to lead the unsecured bond offering, while Citigroup was tapped to lead the at-the-market equity issuance program and the mandatory convertible preferred stock offering. The plan was based on a balanced mix of debt and equity to preserve a strong investment-grade balance sheet. The current offering terms, in setting out fixed or floating rates, include both types, but available information does not specify the tranches’ maturities or pricing.

Fiscal 2026 results provide a backdrop to the demand Oracle is seeking to meet: total revenue rose 17% to $67.4 billion, while cloud revenue increased 39% to $34.0 billion. Remaining performance obligations stood at $638 billion at the end of the fourth quarter, up 363% year over year and $85 billion from the end of the third quarter. At the same time, the company posted operating cash flow of $32.0 billion, up 54%, but free cash flow was negative $23.7 billion as infrastructure investment continued. Oracle said prepaid components and customer-provided equipment under large AI contracts totaled $75 billion. That represents a contribution from customers that reduces the capital the company needs to raise to build data centers, despite continuing investment needs.

Fiscal 2027 indicators continue to show the strength of demand and the scale of execution required: Oracle said more than $30 billion in AI cloud contracts were added in the first quarter, lifting remaining performance obligations to $664 billion. It also reported delivering more than 300,000 GPU units to customers since the end of the fourth quarter of fiscal 2026. In the first quarter, operating cash flow was $23 billion, up 184% year over year, while free cash flow remained negative at $5 billion. The company also completed a $20 billion sale of common stock through its at-the-market program during the same quarter. Together, these indicators combine growth in contractual obligations, expanded operating capacity and the use of equity financing alongside debt.

On October 28, Oracle capped additional capital markets financing at $20 billion for its investment cycle between fiscal 2027 and fiscal 2030. It said the expected amount would be split between $10 billion in equity and $10 billion in gross debt, excluding refinancing of existing debt. In June, the company had expected to raise about $40 billion in debt and equity during fiscal 2027, including a $20 billion at-the-market equity issuance program. It later announced it had completed the sale of that amount of stock in the first quarter of fiscal 2027. The cap places capital markets financing within a defined framework for the investment cycle, while the November offering adds a new development to the financing path the company had previously described.

Oracle is targeting positive free cash flow in the second half of fiscal 2028, followed by at least $30 billion in fiscal 2029. It has also set a target of total revenue of $225 billion or more in fiscal 2030, with compound annual growth of more than 35% from fiscal 2026 through 2030. In the nearer term, the company guided to total revenue growth of between 30% and 34% in the second quarter of fiscal 2027, and cloud revenue growth in dollars of between 65% and 71%. These targets come amid expanding contracts and infrastructure investment, while free cash flow remained negative in the first quarter. In the days before the news, the stock closed at $126.06 on October 26, $130.53 on October 27, $144.54 on October 28, then $139.56 and $130.67 on October 29 and 30, respectively.