Clear future financing arrangements ease market concerns. Bond prices rose across the board as Oracle Corporation (ORCL.US) stock price fell sharply.

As investment in artificial intelligence (AI) infrastructure continues to heat up, Oracle Corporation (ORCL.US) is experiencing a rare divergence in the stock and bond markets. On Thursday, Oracle Corporation's stock price plummeted nearly 13% as the company's latest financial report showed capital expenditures exceeding market expectations, sparking concerns among investors about the return on investment in AI infrastructure. However, unlike the pessimistic sentiment in the stock market, bond investors are welcoming the funding signals released by Oracle Corporation, with bond prices generally rising and credit risk indicators improving simultaneously. Market participants believe that the key reason driving the strength in bonds is Oracle Corporation's clear explanation to investors of its future funding arrangements, mitigating market concerns about its continued debt expansion. According to the information disclosed by the company, Oracle Corporation expects to raise approximately $40 billion in funds through debt and equity financing in the current fiscal year, including the previously announced $20 billion "share repurchase program at market prices". At the same time, the company stated that it will not issue any new bonds for the remainder of the year. Since Oracle Corporation's fiscal year ends at the end of May each year, and the company is not expected to issue new bonds in the 2026 calendar year, the market generally expects its next round of bond financing to occur in the first five months of 2027. This statement quickly boosted confidence in the bond market. Data shows that the credit spread on Oracle Corporation's bonds due in 2050 with a coupon rate of 3.6% narrowed to about 1.93 percentage points; and the credit spread on bonds due in 2046 with a coupon rate of 6.55% also decreased to a similar level. In the credit default swap (CDS) market, the cost of investors purchasing default insurance for Oracle Corporation's debt has also significantly decreased. A decrease in CDS prices usually indicates a more optimistic outlook on a company's debt repayment ability and credit quality. Mark Clegg, Senior Fixed Income Trader at Allspring Global Investments, said, "In the current AI financing boom, companies that can clearly outline their future financing arrangements are most welcome in the market. Investors least desire to see an unlimited expansion of the balance sheet, and the more transparent the financing plan, the more stable the credit spread typically is." Scott Kimball, Chief Investment Officer at Loop Capital Asset Management, also pointed out that the recent large-scale financing by major tech companies has made the bond market particularly sensitive to new supply. "Many investors have been worrying about the pressure brought by continuous financing by tech giants, so any news that can give the market a little breather is welcome." In fact, Oracle Corporation has become an important player in the global AI infrastructure investment wave. In February of this year, the company just completed a $25 billion investment-grade bond issuance, becoming one of the largest corporate bond issuances in U.S. history. Currently, Oracle Corporation's outstanding bond balance in the Bloomberg U.S. Investment Grade Corporate Bond Index is around $117 billion, making it one of the largest bond issuers outside the financial industry. The company's capital expenditures are also growing rapidly. As of the end of May 31st fiscal quarter, Oracle Corporation's capital expenditures were approximately $16.5 billion, pushing the full-year capital expenditures to $55.7 billion, higher than the previously expected $50 billion level. Capital expenditures are primarily used for building data centers and related AI infrastructure. Hilary Maxson, CFO of Oracle Corporation, stated during the earnings call that the company expects net capital expenditures for the current fiscal year to further increase to around $70 billion. Compared to the previous fiscal year, this means that capital investment will increase by about $20-25 billion. She explained that part of the increase comes from the company's early procurement of key hardware equipment and components to ensure the smooth progress of future AI infrastructure construction. Oracle Corporation currently faces challenges similar to "super-large cloud service providers" such as Microsoft Corporation (MSFT.US), Alphabet Inc. Class C parent company Alphabet (GOOGL.US, GOOG.US), Amazon.com, Inc. (AMZN.US), on one hand, it needs to continue investing significant funds in building AI data centers, and on the other hand, it must demonstrate to investors that these investments will yield sufficient returns in the future. From the stock market's response, investors are still concerned that rapid capital expenditure growth may compress the company's future earnings capacity. However, the bond market clearly focuses on another issue, whether the company can maintain a stable funding capability and controlled debt risks. At least for now, Oracle Corporation's answer seems to be satisfying to bond investors.