Oracle's $18 Billion New Mexico Data Center Debt Faces Market Pressure

On September 18, loans tied to Oracle’s “Project Jupiter” data-center campus in Doña Ana County, New Mexico, were reported trading at 89 – 91 cents on the dollar. The $18 billion loan package, arranged late last year, was intended to fund construction of the 1,400-acre facility.

Oracle’s $18 Billion New Mexico Data Center Loans Hit A Speed Bump

Oracle’s agreement with OpenAI calls for the New Mexico campus to provide AI computing capacity. The project was originally slated to be powered by 2.2 gigawatts of gas turbines, but the state land office blocked a request to run a natural-gas pipeline to the site, raising questions about its energy supply. Local opposition has voiced concerns that the data center could strain water resources and degrade air quality, adding uncertainty to the development timeline.

Reuters

The loan consortium, led by Santander and Jefferies, now holds a larger share of the debt than initially planned because attempts to sell the securities to a broader investor pool have stalled. The reduced market price of 89 – 91 cents reflects a discount of roughly 9 % – 11 % from face value. Oracle’s corporate credit rating sits one notch above junk after an S&P downgrade in July.

Reuters

Oracle, Santander, and Jefferies have not provided comments on the loan pricing, the project’s challenges, or the local opposition. No official response has been issued regarding the blocked pipeline or environmental concerns.

Reuters

The pricing pressure signals heightened investor scrutiny of Oracle’s expanding debt load as the company ramps up AI-infrastructure spending. If the financing gap persists, delays or scaling back of Project Jupiter could affect Oracle’s ability to meet its AI partnership commitments with OpenAI, while also exposing the banks to higher credit risk.

Reuters