Oracle lost $10 billion in market value following Nvidia CEO turmoil, as bond yields rose and default swaps spiked, prompting fears of a junk‑rating downgrade.
Oracle Corp. saw its market capitalization shrink by $10 billion in after‑hours trading on Saturday, after the New York Times reported a second personal scandal involving Nvidia CEO Jensen Huang and the Wall Street Journal noted that Nvidia’s board is preparing to remove him. The negative press around Nvidia, a key partner for Oracle’s AI hardware, amplified existing worries about Oracle’s financing strategy and credit health.
According to Protos, Oracle’s recent bond program has become markedly more expensive. In February the company sold 2029‑maturity notes at a 4.6 % yield‑to‑maturity, while the November issuance of the same maturity carried a 7 % yield. The spread over U.S. Treasury yields widened from 0.95 to 2.40 percentage points, and the 2046‑year bond’s yield rose from 6.56 % in February to 8.67 % in November, reflecting higher Treasury rates and a premium demanded by investors.
Traders’ perception of Oracle’s credit risk has deteriorated sharply. Protos reported that five‑year credit default swaps on Oracle traded near 305 basis points last week, a five‑fold increase from the 58‑basis‑point level a year earlier. The surge in CDS pricing suggests market participants are pricing in a higher probability of default as the company’s leverage climbs.
Oracle currently sits at S&P’s “BBB‑” rating, just one notch above junk status, with Moody’s and Fitch two notches higher but both maintaining a negative outlook. Analysts warned that leverage projected in the mid‑4× range for fiscal 2027 exceeds Oracle’s preferred mid‑3× threshold, increasing the risk of a downgrade. Compounding the financial strain, Microsoft is winding down rentals of Oracle AI compute, and Oracle’s OpenAI‑backed data‑center project in New Mexico faces indefinite permitting delays, leaving built facilities without power.
Investors should monitor any rating agency actions, especially a possible downgrade to junk before mid‑2027, as well as Oracle’s upcoming $10 billion equity and bond sales slated through fiscal 2030. The outcome of the New Mexico data‑center permitting process and further developments in Nvidia’s leadership saga could also influence Oracle’s credit outlook.
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