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Oracle’s CDS Spread Widens Further Amid Cash Burn, Capex Concerns
December 11, 2025
Oracle’s credit risk gauge measured by its 5Y CDS spread, rose yesterday after the company reported another sharp increase in spending on data centers and AI equipment. Oracle’s cash burn has increased this quarter and its free cash flow reached a negative $10bn. Its capex stood at ~$12bn, an increase from $8.5bn in the preceding period. Analysts have voiced concerns about whether its massive investments will generate profits quickly enough.
As per Bloomberg, its 5Y CDS spread widened to ~124bp, nearing levels seen earlier this month when the indicator hit its highest level since the global financial crisis. Oracle carries nearly $106bn in debt, and banks financing its data-center construction are believed to have increasingly hedged their exposure by buying CDS. Trading volumes in Oracle CDS have surged to $9.2bn over the past 10 weeks, up from just $410mn a year earlier. Analysts warn that Oracle’s rising leverage could threaten its investment-grade status (currently rated Baa2/BBB/BBB). Morgan Stanley previously cautioned that Oracle’s CDS spreads could climb to 150–200bp if financing clarity remains limited, citing risks such as a widening funding gap, balance-sheet expansion, and potential obsolescence. Despite the pressure, co-CEO Clay Magouyrk said Oracle remains committed to maintaining its investment-grade rating and expects to borrow “substantially less” than analysts forecast.
Its 4.125% 2045s traded stable at 75.1, yielding 6.4%.
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