Oracle's $18bn Data Centre Debt Slides Amid Local Pushback on Project Jupiter

Oracle's $18bn Data Centre Debt Under Pressure

About $18bn of loans tied to Oracle's massive data centre in New Mexico slid into stressed territory on Friday, with syndicate banks including Santander and Jefferies privately quoting the debt at 89 to 91 cents on the dollar1

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. Healthy debt typically trades within a tight band near par, making this decline a clear signal of investor concerns. The Project Jupiter campus, sprawling across 1,400 acres in Doña Ana County, sits at the heart of Oracle's landmark $300bn contract with OpenAI to provide computing power for AI infrastructure development1

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. The marquee project secured $18bn in loans from a consortium of banks late last year to kick-start construction, along with billions in equity investment from Blue Owl1

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Financial and Regulatory Challenges Mount

Efforts to offload Oracle's $18bn data centre debt to a broader group of investors have hit a wall due to concerns around the company's massive borrowing and declining creditworthiness2

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. Oracle's corporate credit rating currently sits one notch above junk following a downgrade from S&P in July, forcing banks to hold more Oracle-linked project debt on their balance sheets than initially planned1

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. The debt secured a private investment-grade rating from credit rating agencies, but the market's response tells a different story1

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. Oracle's stock has plunged 50 per cent since it unveiled its $300bn deal with OpenAI a year ago, and last week, Oracle's 82-year-old co-founder Larry Ellison abruptly cancelled a $7.5bn share-trading plan without explanation1

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. These developments underscore growing investor concerns about Oracle's ability to manage its expanding AI infrastructure while maintaining financial stability.

Local Opposition Threatens AI Infrastructure Development

Project Jupiter has faced fierce local opposition over concerns about its impact on the local area's water supply and air quality1

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. The New Mexico data centre campus was initially going to be powered by 2.2 gigawatts of gas turbines, but the state land office blocked a request to run natural gas pipelines to the site2

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. In April, Oracle announced it would power itself with Bloom fuel cells, which emit less sulphur and nitrogen oxides, but permission to connect a pipeline to feed these was also blocked1

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. The project's air permit application was paused in August after lawsuits from two environmental groups, although a judge said the process could continue on Thursday1

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. A recent poll by the Albuquerque Journal found that 65 per cent of New Mexico residents oppose the development of large data centres, versus only 20 per cent supporting such construction1

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Political Headwinds and OpenAI Computing Capacity at Risk

Deb Haaland, New Mexico's Democratic gubernatorial nominee and a former US Interior secretary, said she would pause all new data centres if elected in November and require developers to heavily invest in renewable energy1

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. State filings show Oracle donated more than $12,000 to her campaign in late August, though it remains unclear how a moratorium could affect the company's sites1

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. "Big Tech's mantra may be 'move fast and break things', but here in New Mexico, we do things our way," Haaland said in a press conference1

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. Project Jupiter's initial phase is at least seven months behind its proposed date to come online, according to market intelligence firm SynMax, with completion expected by November this year now delayed1

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. The delays threaten Oracle's ability to deliver OpenAI computing capacity as promised, potentially jeopardizing the broader $300bn partnership. Watch for how Oracle navigates these regulatory hurdles and whether the company can secure alternative energy solutions to move forward with AI computing infrastructure critical to its partnership with OpenAI.