#debt-issuance

#debt-issuance

A lot of the hoopla started when investors questioned Oracle's ( NASDAQ:ORCL) heavy debt load for the OpenAI deal. Capital expenditures came under pressure, and people wondered how OpenAI would be able to pay $300 billion over five years. That contract starts in 2027, and rumors circulated that OpenAI pushed back its data center completion to 2028, a year later than initially planned. It put more pressure on AI data center providers like IREN, even though Oracle refuted the rumor on the same day.

Even as this trend has taken hold, the spread of the investment grade bond markets over treasuries, in aggregate, has gone from about 70 basis points to about 85 basis points today. I would anticipate that if the hyperscaler debt issuance theme continues, we could see spreads widen as much as 95 basis points, which is material when we're talking about a relatively low volatility market,