Goldman Sachs: AI debt "barometer" stabilizes! Oracle(ORCL.US)'s record-breaking bond issuance is expected to stimulate a tech lending boom

According to Goldman Sachs’ underwriting division, Oracle (ORCL.US)'s record-breaking latest bond issuance has eased tensions in the debt market and also energized other tech giants looking to raise billions of dollars for data center infrastructure development.

Previously, the massive funding needed for expansion projects—estimated at up to $5 trillion—had raised concerns about an oversupply in the debt market. On Monday, Oracle raised $25 billion in high-quality bonds, attracting numerous yield-seeking investors, with orders exceeding $129 billion, setting a record for such issuances. This is undoubtedly a positive sign. Goldman Sachs was one of the Wall Street banks involved in the deal.

John Sales, head of investment-grade bond underwriting at Goldman Sachs Americas, said in an interview, “Everyone is talking about record supply, but I think what’s more interesting is the record demand.”

Although the global syndicated bond issuance after Oracle’s debt offering quickly surpassed $1 trillion—the fastest pace in history—investors’ extra compensation demanded for taking on corporate bond risk has approached its lowest level in nearly 30 years. Last month, US high-grade corporate bond issuance exceeded $200 billion, making January one of the five highest months ever for issuance.

Oracle, the cloud computing giant with the lowest credit rating among its peers, has become a barometer for AI investment. Its recent debt trading prices are closer to junk bonds than investment-grade bonds, and the company has stated it does not plan to issue new debt in 2026, which has eased some pressure.

Sales said this was a market clearing event because it removed a major issuer from the supply channel and reduced the likelihood of Oracle’s debt being downgraded in the short term. He noted that before Oracle announced its bond issuance, the risk premiums on some of its bonds had risen by as much as 25 basis points from Sunday night to early Monday.

Indeed, investors still see many risks in AI investments. Anxiety surrounding AI trading has heightened concerns, leading to over $1 trillion in market cap being wiped out from the Nasdaq 100 index in a week. Large tech companies issuing significant amounts of bonds could further widen spreads in the industry and the broader market this year. Currently, most of Oracle’s newly issued bonds are trading higher in the secondary market.

For now, the credit market remains generally optimistic. Sales said, “The market is fully open. From a spread perspective, things are very good. From a demand perspective, looking at Oracle’s order volume, things are also very strong.”

Other large-scale data center operators may also enter the market soon after earnings season. Amazon (AMZN.US) plans to invest $200 billion in data centers this year, while Google’s parent company Alphabet (GOOGL.US) expects capital expenditures to reach $185 billion, both above analyst expectations. Meta Platforms (META.US) and Microsoft (MSFT.US) have also reported earnings and are thus able to issue bonds.

Data shows that Goldman Sachs has led approximately 6.8% of US high-grade bond sales this year (excluding self-led transactions), making it the fifth-largest underwriter. Salespeople also expect that in the coming months and quarters, as the issuance window opens following earnings reports, there will be a concentrated supply period with a surge of acquisition-related deals entering the market.