JPMorgan Chase and Mitsubishi UFJ Financial Group are close to finalizing a $38 billion loan package intended to back Oracle Corp.'s data center development in Texas and Wisconsin, according to people familiar with the matter. The banks assumed the financing in August and have been working to distribute risk across a wide group of lenders and investors.
More than two dozen banks and institutional investors joined the borrower group to participate in the facility. Even so, one person with knowledge of the arrangement said lenders remain intent on offloading under $1 billion of the total commitment, reflecting continued efforts to reallocate exposure.
The package marks the largest debt financing of its type on record for new U.S. data centers. The transaction arrives against a backdrop of geopolitical uncertainty and an uptick in the perceived credit risk associated with Oracle. Those dynamics have complicated distribution and investor appetite for large-scale hyperscaler deals.
Market participants have highlighted the length of the syndication effort as a potential warning sign about financing conditions for major data center projects. Since last year, roughly $275 billion of borrowing has been deployed for hyperscaler and data center projects, and some lenders appear less inclined to keep increasing their exposure to the AI buildout.
In addition to the $38 billion facility, lenders are arranging several billions more in funding for data centers tied to Oracle's Stargate AI infrastructure contract with OpenAI, a program that originally foresaw investments of up to $500 billion over four years. Those additional financings remain in progress as institutions weigh their commitments.
Complicating the picture, Oracle has been operating with negative free cash flow and has seen the cost of insuring its debt against default climb in recent months. That rise in insurance costs has intensified concerns about concentrated credit risk among the financial institutions participating in the loans.
Bottom line: Lenders led by JPMorgan Chase and Mitsubishi UFJ Financial Group are nearing completion of a record $38 billion loan for Oracle data centers in Texas and Wisconsin, with under $1 billion of the package still being shopped to investors. The financing underscores strained market appetite for hyperscaler data center debt amid concerns over Oracle's cash flow and rising debt insurance costs.