Oracle data center financing nears close as debt terms shift

Related Digital is finalizing about US$16 billion to build Oracle’s Michigan data center campus, with the financing expected to close as soon as this month.

Blackstone’s equity check is now around US$2 billion, while a US$14 billion package led by Bank of America.

The talks dragged on after local officials denied the project’s zoning request, and lenders pressed Oracle to tighten lease terms that backstop the debt, while an analysts said borrowing spreads on Oracle-linked projects widened to non-investment-grade levels between September and January.

Oracle heavy data center spending has pushed free cash flow negative, prompting some banks to offload related debt.

🔗 Source: Bloomberg

🧠 Food for thought

Implications, context, and why it matters.

Oracle uses off-balance-sheet deals to fund a big data center push

Oracle is not the borrower for the Michigan project. The company uses an off-balance-sheet setup where it offers a long-term lease meant to give lenders steady cash flow 1.
Oracle has committed $248 billion to data-center leases that have not yet started 1.
More financing is underway, including a roughly $38 billion debt package tied to Oracle-linked sites in Wisconsin and Texas 2.
The scale of funding creates friction. Oracle confirmed Blue Owl Capital, an alternative asset manager, will not provide equity for the Michigan build, which has added scrutiny to the project 1.

The AI data center buildout leans heavily on OpenAI demand

The structure concentrates risk because this project and others are meant for Oracle to run OpenAI workloads 2.
Critics cite OpenAI’s finances and reliance on ongoing funding as a concern for infrastructure partners, though the source material does not back specific claims about obligations or revenue 3.
TD Cowen analysts said scrutiny rose after borrowing spreads on Oracle-linked projects widened to non-investment-grade levels between September and January [summary].
Critics argue that slower OpenAI growth or a funding pullback could leave developers with underused facilities and strain related debt 3.