JPMorgan, MUFG Hold $38 Billion Oracle Data Center Debt After Six Months of Distribution Attempts

Banks originated the debt through special-purpose vehicles for Oracle, Meta and similar AI operators, then hit internal concentration limits on single-sector exposure. Risk-transfer structures allow the loans to remain on balance sheets while shifting first-loss slices to third-party investors. Lenders are now offering portions at discounts after failing to syndicate the full amount to traditional buyers. Oracle five-year credit default swaps reached 151 basis points in early October, matching 2009 levels, while S&P downgraded the firm to BBB- in July. Order books for bonds from Alphabet, Amazon, Meta, Microsoft and Oracle contracted from five times oversubscribed in February to under two times by July. Ten-year Treasury yields cleared at 5.30 percent in the largest auction since 2000, raising the baseline cost for all new data-center financing. SPV structures intended to isolate AI capex risk have instead concentrated it at the originating banks, forcing expense management changes including accelerated syndication and selective discounting. Capital is rotating toward facilities already leased to investment-grade tenants rather than new greenfield construction. This pattern mirrors prior cycles where rapid infrastructure buildouts met funding-capacity constraints within two to three quarters. Next-quarter earnings will show whether banks record markdowns on unsold tranches or further increase risk-transfer volumes above $10 billion per institution. Oracle's additional $40 billion debt target faces thinner demand unless spreads compress below 120 basis points.