Oracle’s Project Jupiter Loans Quoted Below Face Value as AI Spending Climbs

Oracle’s AI expansion has a financing problem before its New Mexico data center is complete: loans tied to Project Jupiter are being quoted below face value. About $18 billion of the loans were quoted at 89 to 91 cents on the dollar, according to Financial Times reporting attributed through Reuters. The discount puts fresh attention on whether Oracle can turn its fast-growing cloud business into cash quickly enough to support its building program.

A discount on a project still being built

The quotes concern loans connected to Project Jupiter, not a newly announced Oracle financing deal. A quote below face value signals that lenders may have to accept a discount to place the debt; it does not establish that the entire $18 billion changed hands at that price. Banks have struggled to distribute the loans to other investors as concerns about Oracle’s leverage have grown, according to the account carrying the Financial Times and Reuters reporting.

Jupiter is part of Oracle’s AI infrastructure expansion with OpenAI. Its financing is now exposed to two clocks: the cost of building capacity and the time it takes to bring that capacity into service. Reuters also noted that S&P downgraded Oracle in July to one notch above junk, adding context to investors’ concern about how much debt the company can carry.

The spending comes first

Oracle spent $55.7 billion on capital projects in fiscal 2026, up from $21.2 billion the year before, and recorded negative free cash flow of $23.7 billion. Spending reached $28.5 billion in the first quarter of fiscal 2027 alone. Oracle expects full-year capital expenditures to exceed the previous year’s total. Those figures show why a delay in putting new capacity to work would matter: the spending is already underway.

At August 31, Oracle had $125.3 billion in notes payable and other borrowings, against $37.1 billion in cash and marketable securities. It also had $34.6 billion in recognized operating lease liabilities. A further $288 billion in data-center lease commitments is expected to begin between fiscal 2027 and fiscal 2029. Not all of those commitments are current bills, but they extend the financial stakes well beyond the Jupiter loans.

Demand offers a counterweight

The case for taking on that burden is visible in Oracle’s sales. Cloud revenue rose 62% to $11.6 billion in the first quarter of fiscal 2027, including $7.4 billion in cloud-infrastructure revenue, up 121%. Remaining performance obligations—contracted business not yet recognized as revenue—reached $664 billion, an increase of $209 billion from a year earlier. The backlog signals demand, though it is not cash available today to pay construction bills.

Oracle says $75 billion of its large AI contracts involve customers prepaying for graphics processors, or GPUs, or supplying the chips themselves. That arrangement can reduce how much hardware Oracle must finance. It does not remove the need to fund data centers: Oracle raised $43 billion in debt and $5 billion in equity in fiscal 2026 and expects about $40 billion more in debt and equity financing in fiscal 2027.

The opening date is a financial variable

Project Jupiter has faced local opposition over water and air quality, as well as a regulatory setback involving a proposed natural-gas pipeline. None of those concerns, by itself, establishes that the data center will open late. They do make its development schedule a material question for lenders: a longer wait for usable capacity could leave Oracle carrying infrastructure costs before the facility earns revenue.

Cloud growth has not yet made those costs disappear. Oracle’s cloud and software margin percentage declined in its latest quarter as infrastructure expenses rose. The Jupiter loan quotes therefore sharpen a specific test: whether revenue from new capacity arrives soon enough to cover the spending and financing required to build it.