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Why Oracle’s ‘jumbo’ AI-fueled bond deal is so unusual

1. Oracle issued an unconventional $18 billion bond offering for cloud expansion. 2. Demand peaked at nearly $88 billion, indicating strong investor interest. 3. Negative free cash flow of $6 billion raises concerns about Oracle's debt sustainability. 4. 40-year bond maturities are unusual for a technology company like Oracle. 5. Analysts caution about potential debt bubbles and uncertain future revenue realization.

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FAQ

Why Neutral?

While the bond offering shows strong demand, negative cash flow raises concerns. Historical contexts, such as 2000 dot-com bubble, should remind investors of tech volatility.

How important is it?

The bond issuance is significant due to high demand and its unconventional nature, impacting Oracle's financing strategy and market perception.

Why Short Term?

The immediate effects relate to Oracle's financing and cash flow, influencing market perception. Longer-term effects depend on how the investments translate into revenue.

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