Oracle(US:ORCL) Sou Hu Cai Jing·2025-12-03 09:51Group 1 - The core concern is that the surge in generative AI, driven by companies like Oracle, is leading to increased credit risk in the market, as indicated by the rising credit default swap (CDS) rates [2][3] - Oracle's 5-year CDS reached 128 basis points, the highest since March 2009, reflecting a significant increase of over two times since June [2] - Oracle's low credit rating of "BBB" amidst high debt levels makes it a focal point for market anxiety, with its CDS volume surging to approximately $5 billion, a 25-fold increase year-on-year [3] Group 2 - Concerns arise over Oracle's ability to sustain its debt issuance and investment cycle, as management hinted at potential revenue from AI but did not clarify cash flow projections [4] - Analysts predict that if Oracle raises an additional $20 billion to $30 billion in debt next year, its CDS could approach 200-250 basis points, nearing historical highs from the 2008 financial crisis [4] - The supply of investment-grade bonds is expected to reach a record $2.1 trillion by 2026, with technology and utility sectors dominating, leading to higher risk premiums for investors [6] Group 3 - The "winner-takes-all" nature of the AI race raises concerns about asymmetric returns for bondholders, who may face declining credit quality while missing out on equity-like returns [6] - Historical comparisons are made to the healthcare sector, which managed to stabilize spreads despite high leverage, but the uncertainty surrounding AI infrastructure returns poses a greater risk [6] - The current CDS pricing serves as a warning signal, indicating that the market is beginning to reprice AI-related debt amid concerns over future cash flows and potential risks [7]