Oracle is going back to the well. The company is raising another $20 billion to fund its AI infrastructure buildout: $10 billion in bonds and $10 billion in common stock.
The stock side: a discount
The other $10 billion is common stock. Reports say Oracle priced about 86.2 million new shares at $116, roughly $9.9 billion net. That is well below the $130.67 close on Oct. 30.
Existing shareholders get diluted, and they are being asked to fund the buildout at a lower price than the stock traded at days earlier.
Things to consider
A 7% to 8.65% coupon on a large tech company is a big step up from Treasuries. That premium reflects real concern about how much debt the AI buildout requires.
Paying about 0.5 point over existing debt suggests the market wanted more yield to take on additional Oracle paper.
Funding half with equity helps protect the balance sheet and the credit rating. That is a plus for bondholders.
The 2046 bond pays the most, but it is the most sensitive to rate moves and to how the AI spending pays off.