Oracle stock rises after Fitch affirms BBB rating amid debt plans

Investing.com -- Oracle (NYSE: ORCL) stock rose 3% Monday morning, reversing an earlier 5% slide after Fitch Ratings affirmed the company’s credit ratings despite plans for substantial debt issuance.

The software giant had initially dropped after announcing intentions to raise $45 billion to $50 billion through debt and equity this year, raising concerns about its financial leverage. However, investor sentiment improved after Fitch assigned Oracle’s proposed benchmark size unsecured bonds a ’BBB’ rating while maintaining the company’s Long-Term and Short-Term Issuer Default Ratings at ’BBB’ and ’F2’ respectively, with a Stable outlook.

Oracle plans to use proceeds from the bond offering for general corporate purposes, including capital expenditures, debt repayment, and potential acquisitions. The significant fundraising is largely tied to the company’s elevated capital expenditures for artificial intelligence compute infrastructure, supporting multi-year commercial contracts with AI leaders including OpenAI, xAI, Meta (NASDAQ: META), and Nvidia (NASDAQ: NVDA).

Fitch forecasts Oracle’s EBITDA leverage will exceed 3.5x in fiscal 2026 but expects a decline in fiscal 2027-2028 as incremental revenue and EBITDA from AI compute investments increase. The rating agency projects negative pre-dividend free cash flow exceeding $26 billion in fiscal 2026 and $18 billion in 2027.

The company had approximately $20 billion in cash, cash equivalents and marketable securities available as of the second quarter fiscal 2026, with about 80% of its revenue coming from recurring sources during that period.

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