An $18 billion loan package tied to an Oracle-leased data centre in New Mexico has reportedly come under pressure, with syndicate banks including Santander and Jefferies quoting the loans at 89 to 91 cents on the dollar. This development, first reported by the Financial Times, arises amid growing local opposition to the ambitious “Project Jupiter” in Doña Ana County. Concerns revolve around the project’s potential impact on regional water supply and air quality, threatening to derail Oracle’s extensive AI infrastructure build-out.
“Project Jupiter,” a sprawling 1,400-acre campus, forms a crucial part of Oracle’s broader agreement with OpenAI to provide substantial AI computing capacity. Oracle is a prominent global technology company, primarily known for its enterprise software products and database management systems. The firm is currently expanding its focus into AI infrastructure and cloud computing services. The project initially secured $18 billion in loans from a banking consortium late last year to commence construction. However, efforts to offload this debt to a wider pool of investors have since stalled due to escalating concerns over Oracle’s increasing borrowing and perceived weakening creditworthiness.
Oracle’s corporate credit rating currently sits just one notch above junk status, following a downgrade by S&P in July. This situation has compelled banks to retain a larger portion of Oracle-linked project debt on their balance sheets than initially anticipated. As Oracle continues to ramp up spending to finance its expansion into AI infrastructure, its rising debt load has drawn increasing investor scrutiny. Adding to the project’s challenges, Project Jupiter, initially designed to be powered by 2.2 gigawatts of gas turbines, faced a setback when the state land office blocked a request for a natural gas pipeline to the data centre. Oracle, Santander, and Jefferies did not respond to requests for comment regarding these developments.
