Oracle rating cut to BBB- as AI data‑center debt and OpenAI reliance rise

S&P Global Ratings downgraded Oracle's long‑term credit rating from BBB to BBB‑ on July 9, moving the company to the lowest tier of investment‑grade. The downgrade reflects the heavy debt financing Oracle is using to expand AI data‑center capacity. S&P projects a free‑cash‑flow deficit of roughly €36.5 billion (about $42 billion) for fiscal 2027.

Oracle reported a FY2026 order backlog of $638 billion (≈€555 billion), with about half tied to OpenAI. The company invested $55.7 billion in FY2026 and expects FY2027 capital spending of $60‑95 billion. It raised $43 billion in new debt and $5 billion in equity in 2026 and plans additional bond issuance in 2027.

The rating cut pushes Oracle's bonds below the investment‑grade threshold for many pension funds, insurers and other institutional investors, potentially raising capital‑requirement burdens under regulations such as Solvency II. Analysts note that while the company is not a bank, its heavy reliance on OpenAI’s payments creates credit risk if the AI firm’s financing falters.