Oracle’s quoted cost of default protection reached 295 basis points on Oct. 19, CNBC reported, as capital spending and future data-center leases drew attention to how the company will finance its AI expansion.
The figure is the reported spread on a five-year credit default swap, a contract that provides protection against a specified credit event. A wider spread means protection is quoted at a higher price; it does not establish that Oracle has defaulted or that investors bought protection at that price.
Oracle’s filing shows the scale of its spending. For the three months ended Aug. 31, it reported $23.103 billion in operating cash flow and $28.499 billion in capital expenditures, leaving free cash flow negative by $5.396 billion. The operating cash flow figure included an $11.363 billion increase in deferred revenue from customer prepayments.
The company also listed $288 billion in additional lease commitments, substantially all for data centers, beyond the lease obligations recorded on its Aug. 31 balance sheet. Oracle said the additional commitments generally are expected to begin between its fiscal second quarter of 2027 and fiscal 2029.
Demand has grown alongside the buildout. Oracle’s cloud infrastructure revenue rose 121% year over year in U.S. dollars to $7.4 billion for the quarter. It reported $664 billion in remaining performance obligations at Aug. 31 and projects that roughly 13% of that amount will become revenue within the following year.
S&P Global Ratings lowered Oracle’s long-term issuer rating from BBB to BBB- on July 9, 2026, leaving it at the lowest investment-grade level. CNBC reported that Deutsche Bank strategist Jim Reid warned a further downgrade could put pressure on investors restricted to investment-grade debt to sell Oracle bonds. Oracle told CNBC that maintaining its investment-grade rating was its first priority.
Oracle issued 141 million shares during the quarter through an at-the-market share sale, raising $19.9 billion in net proceeds. The new shares reduced existing shareholders’ proportional ownership.
The financing question extends to other AI cloud providers.
Oracle has scheduled its fiscal second-quarter 2027 results for Dec. 14, 2026.
