Core Viewpoint - Oracle Corp is facing significant challenges in the bond market due to its increasing debt levels, which have raised concerns among bondholders about the company's financial stability and risk profile [2][4][6] Group 1: Debt and Financing - Oracle has returned to the bond market with $18 billion in new notes and subsequently sought an additional $38 billion in loans to fund AI-focused data centers, leading to a total debt of approximately $108 billion [3][4] - The company's debt load is now the largest among major tech companies, prompting a sell-off in its bonds and a rise in yields as lenders demand higher compensation for perceived risk [4] Group 2: Market Reaction - Bondholders have filed a lawsuit against Oracle, claiming the company did not adequately disclose the extent of additional debt required for its AI initiatives, which has contributed to a sharp decline in bond prices [2][3] - The credit insurance market for Oracle has shown signs of distress, with measures of default protection reaching levels reminiscent of the 2009 financial crisis, indicating that sophisticated investors are hedging against potential risks [5] Group 3: Future Implications - While Oracle's AI strategy may still yield positive results, the bond market is now focused on the company's balance-sheet limits rather than potential upside, suggesting that equity optimism alone may not suffice to maintain investor confidence [6]