Does Oracle lose its investment-grade credit rating?
Will S&P Global Ratings or Moody’s Investors Service cut Oracle Corporation’s senior unsecured long-term credit rating below investment grade (below BBB- at S&P or below Baa3 at Moody’s)?
Still a minority case over the next year, but a real one: Oracle sits exactly one notch above junk at two of three major agencies, and bond and CDS markets are already pricing more stress than the rating implies
The case for a cut: Oracle’s own leverage trajectory (S&P’s base case near 4.4x, Moody’s warning of a temporary run toward 5x) sits right at or above the thresholds each agency has named as downgrade triggers, half of its backlog concentration sits with a single customer (OpenAI) whose own financing is under scrutiny, and CDS and bond markets are already pricing risk closer to junk than the rating suggests. The case against: Oracle has publicly committed to defending its investment-grade rating, Morgan Stanley’s Lindsay Tyler frames a move to high-yield as a medium-term rather than immediate risk, and much of the sell-side has treated the stock and bond selloff as a repricing of financing risk rather than evidence the underlying cloud and AI backlog business is deteriorating.
No fixed date · No scheduled review date is public; S&P rates Oracle BBB- (one notch above junk) with analysts warning a further cut could follow if leverage stays above 4.5x, and Moody’s rates it Baa2 with a negative outlook
S&P cut Oracle to BBB- on July 9, 2026, citing AI-related capital spending, rising component costs and customer concentration risk — one notch above junk, with S&P analyst Andrew Chang saying a further cut could follow if leverage stays above 4.5x (his base case has debt-to-EBITDA peaking near 4.4x over the next two fiscal years). Moody’s rates Oracle Baa2 with a negative outlook, warning leverage could temporarily approach 5x EBITDA, and Fitch (BBB) has said sustained leverage above 3.5x, or above 4x including rents, would trigger negative action. Oracle’s five-year CDS spreads have hit multi-year highs and its bonds trade at yields closer to high-yield territory than its rating implies, even as Oracle says it remains committed to preserving investment-grade status. S&P estimates roughly half of Oracle’s $638 billion in remaining performance obligations is tied to OpenAI, concentrating the risk in a single customer’s own financing ability.
A rating agency either cuts Oracle below investment grade (junk) or it does not in its next rating action on the company — a discrete credit event with no partial outcome, even though the exact timing is unknown.
Researched Oct 28, 2026 · tracked since Oct 28, 2026
What do you think?
Take a side
Oracle is cut to junkthis is “yes”
Oracle’s own leverage trajectory sits right at or above the thresholds S&P, Moody’s and Fitch have each named as downgrade triggers, half of its $638 billion backlog concentrates in a single customer (OpenAI) whose own financing is under scrutiny, and CDS and bond markets are already pricing stress closer to junk than the current rating implies.
Worth knowing: Oracle has publicly committed to defending its investment-grade rating and has levers — slowing capex growth, raising equity, or renegotiating contract terms — it has not yet pulled; a downgrade is not a foregone conclusion just because leverage is elevated.
Oracle keeps its investment-grade rating
Oracle has publicly committed to defending its rating, Morgan Stanley frames a move to high-yield as a medium-term rather than immediate risk, and much of the sell-side treats the recent stock and bond selloff as a repricing of financing risk rather than evidence the underlying AI backlog business is deteriorating.
Worth knowing: Oracle’s own base-case leverage path (debt-to-EBITDA peaking near 4.4x) sits uncomfortably close to the 4.5x level S&P has named as its own downgrade trigger — this is not a comfortable cushion, just a rating that has not yet been cut again.
5 sources, leaning both ways
- mixedComputing.co.uk — Oracle under pressure after ratings downgrade over AI expansionChecked Oct 28: reports the July 9, 2026 S&P downgrade to BBB- and the AI-spending rationale behind it, the primary event this question tracks a further step from.
- yesGeorge Noble (Substack) — Oracle is almost junkChecked Oct 28: frames Oracle as one notch above junk with cash burn from AI data-center spending as the active risk driving a possible further cut.
- yesKuCoin — Oracle’s $638 Billion AI Backlog Faces Credit Rating DowngradeChecked Oct 28: ties the downgrade risk directly to the scale and customer concentration of Oracle’s AI order backlog.
- noTIKR — Oracle Just Dropped 12% in a Month. Is It Time to Sell, or Load Up?Checked Oct 28: presents the bull case that Oracle simply needs time to finish its AI buildout and that the selloff has outrun any change in fundamentals, arguing against an imminent further downgrade.
- noThe Star (Malaysia) — Analysis: Oracle Corp goes for high-stakes ratings gamble in AI strategyChecked Oct 28: frames Oracle’s leverage as a calculated, deliberate strategy rather than a company losing control of its balance sheet, consistent with management’s stated commitment to defending its investment-grade rating.