---
title: "Traders put a one-in-five chance on Oracle defaulting within five years"
description: "Credit-default swaps tied to Oracle closed Thursday at a record 261 basis points, in a one-day repricing of AI credit that set records at Broadcom and SpaceX too. Oracle's answer is not less borrowing: Apollo and Goldman Sachs would fund a company that buys the chips and leases them back."
publisher: "The Inference"
section: "Money"
published: 2026-10-09T03:18:11.510Z
modified: 2026-10-09T03:18:11.510Z
canonical: https://theinference.org/article/traders-put-a-one-in-five-chance-on-oracle-defaulting-within-five-years
language: en
keywords: "Oracle, Credit, Debt, OpenAI, AI"
---

# Traders put a one-in-five chance on Oracle defaulting within five years

> Credit-default swaps tied to Oracle closed Thursday at a record 261 basis points, in a one-day repricing of AI credit that set records at Broadcom and SpaceX too. Oracle's answer is not less borrowing: Apollo and Goldman Sachs would fund a company that buys the chips and leases them back.

The lenders financing artificial intelligence stopped waiting for a default. On Thursday, October 8, the cost of insuring [Oracle](https://theinference.org/markets/companies/oracle)'s debt against default rose 10.5 basis points to a record close of 261 basis points, and swaps tied to [Broadcom](https://theinference.org/markets/companies/broadcom) and [SpaceX](https://theinference.org/markets/companies/spacex) set records of their own [1]. Oracle stock fell 5.5% on the day, Broadcom 4.4%, SpaceX 4.2% [1].

Those prices imply a better-than-20% probability that Oracle defaults within five years, about 16% for SpaceX, and more than 7% for [Nvidia](https://theinference.org/markets/companies/nvidia), the world's most valuable company [1]. [By Bloomberg's account](https://finance.yahoo.com/markets/stocks/articles/ai-debt-spree-hammers-tech-222451927.html), the issue is less about actual deterioration in credit quality than about market saturation [1]. The market is charging for the possibility anyway.

*Chart: **Swap prices put a 20%-plus default chance on Oracle within five years** Columns of implied five-year default probabilities: Oracle above 20%, SpaceX about 16%, Nvidia more than 7%.*

*Five-year default probabilities implied by credit-default-swap prices on October 8, 2026. Bloomberg reports the odds above 20% for Oracle, about 16% for SpaceX and more than 7% for Nvidia; columns show those reported levels. Source: Bloomberg via Yahoo Finance. [1]*

## The trigger was a revenue revision

The repricing landed the same day [OpenAI](https://theinference.org/markets/companies/openai) [told investors its annualized revenue reached about $50 billion at the end of September](https://finance.yahoo.com/markets/stocks/articles/openai-corrects-annualized-revenue-figure-183756345.html), not [the $68 billion circulated weeks earlier](https://theinference.org/article/the-70-billion-openai-number-wall-street-lent-against-is-now-50-billion); the larger figure had counted partners' gross revenue, to ease comparison with [Anthropic](https://theinference.org/markets/companies/anthropic) [2][3][4]. Oracle, the barometer traders use for AI credit risk [1], now trades 56.8% below its October 2025 high [2]. A 10-year Treasury yield that briefly touched 5.36% compounded the pressure [3].

## The answer is a lease, not a bond

Bloomberg counts nearly half a trillion dollars of new AI debt priced this year by borrowers led by Oracle, Broadcom and SpaceX, plus nine US high-grade deals of $25 billion or more, a record, mostly in tech [1]. Broadcom alone may raise about $600 billion in the coming years [1]. Oracle's total debt has climbed from $99.5 billion in November 2024 to $169.1 billion, with free cash flow negative by $28.7 billion over four quarters [5].

*Chart: **Oracle's capital spending has outrun its operating cash for five straight quarters** Line chart of Oracle's quarterly capital expenditure and operating cash flow from early 2024 to August 2026, with capital spending rising from about $1.7 billion to $28.5 billion and crossing above operating cash flow in each of the last five quarters.*

*Oracle's quarterly capital expenditure against operating cash flow, calendar quarters Q1 2024 through Q3 2026, in billions of US dollars. Capital spending has exceeded operating cash flow in each of the last five quarters, the gap behind the borrowing; the four-quarter shortfall matches the negative $28.7 billion of free cash flow cited above. Source: Oracle, quarterly figures from its SEC filings, retrieved October 9, 2026. [9]*

Hence the talks with Apollo and [Goldman Sachs](https://theinference.org/markets/companies/goldman-sachs): outside investors would fund a separate company that buys the chips and leases them to Oracle [6]. The structure would cut Oracle's near-term borrowing needs and ease pressure on its credit rating [1]. Broadcom is [arranging more than $50 billion for OpenAI's custom chips; SpaceX wants $40 billion for Nvidia processors](https://www.msn.com/en-us/news/other/oracle-broadcom-and-spacex-seek-blockbuster-debt-deals-to-pay-for-ai-chips/ar-AA2dMjjz) [6][7].

## The risk moves, it does not disappear

The structure has winners. Apollo and Goldman would arrange the machine rather than hold its risk [6], and the swings "create opportunities for traders," in the words of Andrew Dassori, chief investment officer at Wavelength Capital Management [1]. Whoever buys the paper takes the exposure, against a buildout [Morgan Stanley](https://theinference.org/markets/companies/morgan-stanley) estimates needs $1.5 trillion of external financing by 2028 [7].

Most of these borrowers are profitable, and the strain is saturation more than credit quality [1]. The template already runs through junk: a CleanSpark data center leased to a [Meta](https://theinference.org/markets/companies/meta) subsidiary [drew about $10 billion of orders for its $2.28 billion September bond](https://finance.yahoo.com/markets/stocks/articles/meta-tied-data-center-draws-181816486.html), at premiums investors were pushing higher [8]. The exposure left is concentration: "correlated risks that may not be fully reflected in current valuations," in T. Rowe Price portfolio manager Steven Kohlenstein's words [1].

Broadcom's financing should close before year-end, and Oracle wants its deal done this year [6]. The bill is not coming due; it is being syndicated.

## Takeaway

Credit-default swaps on Oracle closed Thursday at a record 261 basis points, a price implying a better-than-20% chance of default within five years; the answer being discussed with Apollo and Goldman Sachs moves the borrowing off Oracle's balance sheet without slowing the buildout.

## Sources

1. [Bloomberg via Yahoo Finance, AI Debt Spree Hammers Tech Debt as Traders Rush to Reprice Risk, 8 October 2026](https://finance.yahoo.com/markets/stocks/articles/ai-debt-spree-hammers-tech-222451927.html)
2. [StockStory via Yahoo Finance, Why Oracle (ORCL) Shares Are Trading Lower Today, 8 October 2026](https://finance.yahoo.com/markets/stocks/articles/why-oracle-orcl-shares-trading-234409986.html)
3. [StockStory via Yahoo Finance, Why Nvidia (NVDA) Stock Is Trading Lower Today, 8 October 2026](https://finance.yahoo.com/markets/stocks/articles/why-nvidia-nvda-stock-trading-000009960.html)
4. [Quartz via Yahoo Finance, OpenAI corrects annualized revenue figure to $50 billion, 8 October 2026](https://finance.yahoo.com/markets/stocks/articles/openai-corrects-annualized-revenue-figure-183756345.html)
5. [TIKR via Yahoo Finance, Oracle Courts Apollo and Goldman for AI Chip Financing as Debt Tops $169 Billion, 8 October 2026](https://finance.yahoo.com/technology/ai/articles/oracle-courts-apollo-goldman-ai-072925320.html)
6. [The Wall Street Journal via MSN, Oracle, Broadcom and SpaceX seek blockbuster debt deals to pay for AI chips, 7 October 2026](https://www.msn.com/en-us/news/other/oracle-broadcom-and-spacex-seek-blockbuster-debt-deals-to-pay-for-ai-chips/ar-AA2dMjjz)
7. [TIKR via Yahoo Finance, SpaceX Wants $40 Billion to Buy Nvidia Chips, and Nvidia Is on Every Side of the Deal, 7 October 2026](https://finance.yahoo.com/markets/stocks/articles/spacex-wants-40-billion-buy-152845243.html)
8. [Bloomberg via Yahoo Finance, Meta-Tied Data Center Draws Blowout Demand for Debut Junk Bond, 18 September 2026](https://finance.yahoo.com/markets/stocks/articles/meta-tied-data-center-draws-181816486.html)
9. [Oracle, quarterly figures from its SEC filings, retrieved 9 October 2026](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001341439)


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Traders put a one-in-five chance on Oracle defaulting within five years — The Inference. Canonical: https://theinference.org/article/traders-put-a-one-in-five-chance-on-oracle-defaulting-within-five-years