OpenAI Owns Half the Lease Book

S&P Global just cut Oracle one notch from investment grade and named OpenAI a "key credit risk" — because a loss-making startup now carries roughly half of Larry Ellison's $638 billion cloud backlog, and if that tenant stumbles, Oracle is stuck with data centers it cannot fill or exit.

What's new: This week, S&P Global Ratings downgraded Oracle's long-term issuer credit rating to BBB- from BBB — one notch above speculative grade.

• S&P called OpenAI a "key credit risk" and warned that if OpenAI could not pay, Oracle could be left with "massive data centre leases that it might be unable to exit," per Inshorts' summary of the rating action.
• OpenAI accounts for roughly half of Oracle's $638 billion in remaining performance obligations.
• S&P also cut Oracle's short-term rating to A-3 from A-2.

Why it matters: Credit analysts and equity traders are reading different books.

• Oracle shares still rose 2.7% on the downgrade day, per Investing.com — investors focused on backlog size, not balance-sheet strain.
• S&P focused on whether the tenant can survive long enough to occupy the racks Oracle is building.

The numbers S&P is pricing:

• Fiscal 2027 capex: now projected at $90 billion–$95 billion, up from a prior $60 billion estimate.
• Free operating cash flow deficit: expected to widen to roughly negative $42 billion, nearly double the prior $24 billion projection.
• Leverage: adjusted debt-to-EBITDA projected in the mid-4x range in fiscal 2027 — above what S&P considers safe for a standard BBB profile. Leverage stood at 3.3x as of May 2025.
• Total debt: roughly $160 billion–$167 billion, per HNGN and Investing.com.

Why Oracle is exposed differently:

• S&P said that "in an industry downturn, we expect Oracle to perform worse than other hyperscalers given its higher reliance on external customers versus internal workloads," per Stockstoearn's summary of the rating report.
• AWS, Google, and Microsoft can backfill empty capacity with their own products. Oracle rents to outsiders — and its biggest outsider is a startup still burning cash.
• The Motley Fool noted OpenAI carries only about $25 billion in annualized revenue against hundreds of billions in cloud commitments across multiple providers — and Oracle's own annual report warns that "some of our customers may be highly leveraged" and that concentration among large OCI customers "could increase these risks."

How Oracle is trying to stay investment grade:

• February 2026: issued $5 billion in mandatory convertible preferred stock.
• Later this year: plans an additional $20 billion equity raise, with tens of billions more expected over the next three years.
• Moody's and S&P both carry negative outlooks; HNGN reports all three major agencies now rate Oracle at the low end of investment grade.
• One more downgrade lands Oracle in BB+ — below investment grade for the first time in company history.

The wider credit signal:

• THE DECODER reports OpenAI has pushed its IPO to 2027 — extending the window where Oracle's biggest customer stays private, unpriceable, and dependent on venture funding.
• That lands the same week SoftBank offered a full corporate guarantee before banks would accept OpenAI shares as loan collateral — and the same IPO crunch where Apple sued OpenAI over hardware theft and Washington cleared GPT-5.6 for a staggered launch.
• Bondholders are already litigating: the Ohio Carpenters' Pension Plan sued Oracle in January, alleging it misled investors who bought $18 billion in notes weeks before Oracle borrowed $38 billion more for data centers, per HNGN.

What to watch:

• Next S&P move: further downgrade if leverage stays above 4x without a credible cash-flow path.
• OpenAI IPO timing: every quarter of delay keeps Oracle's largest tenant off public balance sheets and out of forced-liquidation markets.
• Equity vs. credit divergence: if Oracle keeps diluting shareholders to protect bond ratings while OpenAI's burn rate outruns revenue, the backlog becomes a liability dressed as growth.

Convina's view: Larry Ellison did not build a $638 billion backlog — he built a landlord business whose biggest tenant may never afford the rent. S&P finally said the quiet part out loud: OpenAI is not just Oracle's customer, it is Oracle's credit rating. Equity markets are still applauding the lease signatures. Bond markets are asking who signs the check when the startup's IPO slips another year and the data centers are already pouring concrete.