Oracle priced $10 billion of bonds on November 2 in five pieces, with coupons from 7.000% on notes due 2029 to 8.650% on notes due 2046, per its pricing term sheet. It is also selling $10 billion of common stock in a separate offering, per its prospectus supplement.
Those 2046 notes pay 335 basis points over Treasuries. Microsoft paid 6.15% on its own 2046 notes four days earlier, per its term sheet.
| Maturity | Oracle, Nov 2 | Microsoft, Oct 29 |
|---|---|---|
| 2029 | 7.000% on $2.0 billion | 5.00% |
| 2031 | 7.450% on $1.75 billion | 5.20% |
| 2033 | 7.850% on $2.25 billion | 5.35% |
| 2037 (Microsoft 2036) | 8.000% on $2.5 billion | 5.55% |
| 2046 | 8.650% on $1.5 billion | 6.15% |
The gap holds at every maturity.
Across the five pieces Oracle's average coupon is about 7.8%, or roughly $780 million a year of interest. The expected ratings are Baa2 with a negative outlook from Moody's, BBB- from S&P, the lowest investment-grade rung, and BBB from Fitch.
The stock sale is new money too. At Friday's closing price of $130.67, $10 billion would be about 76.5 million shares, roughly 2.5% of the 3.02 billion Oracle had outstanding at the end of August. The prospectus lists the uses as general corporate purposes, which may include capital spending, debt repayment, acquisitions, dividends and buybacks.
Bottom Line
Lenders are now pricing AI builders by balance sheet. Microsoft borrows at 4.85% to 6.35%, Oracle pays 7% to 8.65%, and the smaller builders we priced on October 19 pay double digits. Oracle's spreads on these notes will show whether that gap is widening.