Oracle Faces Lawsuit Regarding Information Related to 2025 Bond Issue

Oracle Faces Lawsuit Over Undisclosed Debt Plans

Photographer: David Paul Morris/Bloomberg

Oracle Corporation is being taken to court by a group of bondholders who allege the company failed to reveal its intentions to take on additional debt, even as it completed an $18 billion bond sale—one of the largest corporate offerings of 2025.

The Ohio Carpenters’ Pension Plan, which purchased Oracle bonds in September, claims in a lawsuit filed in New York that Oracle did not inform investors about its need to secure substantial extra funding to support its artificial intelligence infrastructure projects.

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Weeks after the bond issuance, Bloomberg revealed that banks were arranging an additional $38 billion in financing to support Oracle’s data center expansion in Texas and Wisconsin. This surge in debt led to Oracle’s bonds being traded at yields and spreads more typical of companies with lower credit ratings, reflecting increased investor anxiety over Oracle’s financial stability.

The lawsuit asserts that Oracle’s bond offering documents were misleading, failing to disclose that the company was already arranging for more debt at the time of the sale—information that could have influenced investors’ decisions and affected the perceived reliability of the bonds.

This legal action highlights the challenges tech giants face as they pour vast sums into AI infrastructure, often relying on heavy borrowing. According to Bloomberg’s analysis, investors who bought Oracle’s high-grade bonds in September have seen paper losses exceeding $1.1 billion across six tranches as of Thursday.

David Scott, an attorney representing the bondholders, stated, “This case is both urgent and important, and we are committed to seeking justice for investors who have experienced considerable financial harm.”

The lawsuit also names Oracle’s chairman and founder Larry Ellison, as well as several major Wall Street banks involved in the bond sale, including Bank of America, Citigroup, Deutsche Bank, Goldman Sachs, HSBC, and JPMorgan Chase.

Both Oracle and the banks have declined to comment on the ongoing litigation.

Oracle is currently undertaking a large-scale expansion of its data center network to support AI operations for OpenAI, incurring significant debt and entering into numerous data center leases. The company recently updated its forecast, projecting capital expenditures to reach $50 billion for the fiscal year ending May 2026—an increase of $15 billion from its previous estimate in September.

Oracle’s Debt and Market Impact

With approximately $95 billion in outstanding debt, Oracle stands as the largest non-financial corporate issuer in Bloomberg’s high-grade index. As the company’s debt load has grown and concerns about a potential AI bubble have mounted, investors have increasingly sought protection by purchasing credit default swaps linked to Oracle. By December, the cost of some of these derivatives had climbed to levels not seen since the global financial crisis.

Reporting assistance by Michael Gambale, Ying Luthra, and Chris Dolmetsch.

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