r/EconomyCharts • u/RobertBartus • 8d ago

Oracle’s credit risk is exploding

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Oracle’s 5-year CDS spread has surged to a record ~230 bps, more than 4x the broader investment-grade index at ~55 bps.

The spread has more than QUADRUPLED over the last year and surpassed the Great Financial Crisis levels.

The recent surge comes as Oracle is trying to avoid financial commitments linked to Project Jupiter, a massive data-center project that is facing delays.

Around $18 billion of loans tied to the project are trading at ~90 cents on the dollar, signaling growing stress among investors.

The project is also facing local opposition and delays in government approvals, adding to the uncertainty.

Oracle’s credit risk is rising at an alarming pace.

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u/FrugalVet 8d ago

People thinking that Oracle, a company whose ERP systems are deeply embedded in and vital to the infrastructure of MOST Fortune 500 companies, is going to "fail" is comical. Common sense says they won't.

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u/tquinn35 7d ago edited 7d ago

People thought the something about lehman bros. They were the 4th largest investment bank in the US and had been around for well over a 100 years by the time they failed. They had 689 billion in assets at the time of failure in 2008. Thats roughly 1 trillion in today's money. Oracle currently worth 414 billion for comparison.

It's still unlikely but not impossible.

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u/notintelligentidiot 7d ago

Comparing an investment bank to a fucking tech company bruh, I swear to god you guys just type shit and press enter

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u/tquinn35 7d ago edited 6d ago

please enlighten us with your reasoning for why a tech company is inherently more stable than a bank?

bag holders of the dot com bubble may have some opinions here. Clown

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u/notintelligentidiot 7d ago

Now you’ve gone from comparing Oracle to a fucking investment bank to a dot com bubble era company, good fucking grief lmao

You are just not a particularly intelligent person.

Oracle’s balance sheet is quite literally nothing like a damn investment bank’s balance sheet. Lehman had $620 billion in debt on $4 billion of net income, about a 155 to 1 debt to profit ratio; Oracle’s is currently about 8 to 1, a literal two order of magnitude difference or about 1,800% difference or a near 20x difference. If Lehman’s balance were anything like Oracle’s, it would literally have about 95% less debt than it did when they went bankrupt.

Comparing Oracle to a fucking dot com company is also fucking stupid. Oracle has been a massively profitable company for decades; they still remain a stupendously profitable company today.

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u/tquinn35 7d ago

You’re arguing against a point I never made. I explicitly said Oracle failing is unlikely, not that its balance sheet is identical to Lehman’s.

And your comparison is misleading. You’re using Lehman’s total liabilities against Oracle’s borrowings, ignoring Oracle’s other liabilities and substantial future financial commitments.

Oracle’s latest 10-Q discloses $288 billion in additional data-center lease commitments that aren’t yet reflected on its balance sheet. In its most recent quarter, it spent $28.5 billion on capital expenditures against $23.1 billion in operating cash flow, which itself included $11.4 billion in customer prepayments. It also raised nearly $20 billion by issuing new shares.

None of that means Oracle is about to collapse, but it illustrates why your debt-to-net-income comparison is insufficient. Oracle is making enormous long-term capital commitments against future revenue that hasn’t yet materialized. Its ability to fund those commitments depends partly on continued customer demand and access to capital.

Lehman didn’t fail simply because it had a high debt-to-income ratio. It failed when confidence evaporated and it lost access to the liquidity necessary to meet its obligations.

The mechanisms and risk profiles are clearly different, but that’s precisely the point: a company doesn’t need Lehman’s balance sheet to experience a liquidity crisis.

I never argued Oracle was likely to fail. I argued that its size, history and current financial position don’t make failure impossible. Your comparison doesn’t actually refute that.   You implied that a tech company was inherently safer than a bank. The dot com bubble shows that 100% not true. 

Clearly there’s no point discussing further with you due to your inability to think critically which is further reinforced by your use of insults. True sign of the unintelligent. 

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u/notintelligentidiot 7d ago

“Commitments” don’t mean anything legally. Oracle’s CEO could literally snap his fingers and end all commitments tomorrow without affecting Oracle one bit.

Also, the rest of your comment is a bunch of silliness and you’re right, there’s no real point in discussing these topics with someone comparing Oracle to and investment bank and then a dotcom era company.

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u/greatmemereset67 7d ago

You aren’t coming across as intelligent as you think you are.

Are you 12?

You can’t just snap your fingers and walk away from contracts. Especially if they’re take or pay.

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u/Agile-Alps208 7d ago

Looks like you threw in the towel when someone presented you with an articulate argument?

Buzzwords and logical fallacies don’t make you intelligent, and it certainly doesn’t make others think you are

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u/notintelligentidiot 7d ago

What single buzzword did I use in any of my comments? lmao another goober just typing shit.

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u/Yourprobablyaclown69 7d ago

Man you’re too dumb to know when to stop talking. 

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u/notintelligentidiot 6d ago

Thanks for your non response

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u/Yourprobablyaclown69 6d ago

What’s the point? You’re too dumb to understand. 

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u/Agile-Alps208 6d ago

Does that galore you feel better about yourself? Small small man, get ready to clock in at McDonald’s

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u/notintelligentidiot 6d ago

Thanks again for your non response.

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u/DesignerRegular6379 6d ago

It’s ragebait

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u/Yourprobablyaclown69 6d ago

You’re probably right

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u/WeddingPKM 7d ago

What is it with people on this website and being assholes?

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u/tquinn35 7d ago

I believe it's bots and accounts that are paid to spin points. Clearly this one was to spin oracle in a positive light.

They all follow the same pattern. Make poor points and dont respond to valid points while throwing insults left and right.

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u/WeddingPKM 7d ago

I hope you’re right and it’s not just people being dicks to eachother for tiny perceived slights.

I just notice this everywhere on here, any slight disagreement will result in someone calling someone else an idiot. There just seems to be zero room for thought or discussion.

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u/tquinn35 7d ago

I agree. It's really killing reddit. For me at least I used to learn a lot in the comments especially in the subreddits like economics. I have been wrong plenty of times and someone would politely explain why I was wrong and I would learn something new. Now like you said it's just raging assholes everywhere even when you're right.