By Surbhi Jain
Publication Date: 2025-11-28 18:28:00
Oracle Corp (NYSE:ORCL) is aware of a problem that no tech giant wants AI mania market: Credit risk headlines louder than growth headlines. Morgan Stanley issued a stark warning on Wednesday, pointing to increasing strains on Oracle’s balance sheet as the company aggressively borrows to finance the expansion of its hyperscale AI data center.
The cost of insuring Oracle’s debt against defaults – the five-year credit default swap – rose to 125 basis points this week, its highest level in three years, and analysts say it could rise toward 2008 crisis highs near 200 basis points if investor concerns about the company’s finances continue to grow.
In a research note, Morgan Stanley analysts Lindsay Tyler and David Hamburger departed from their previously bullish stance on bonds and wrote: “We are closing the ‘buy bonds’ aspect of the basis trade but retaining the ‘buy CDS protection’ component.” Translation: Stop lending to Oracle and start betting on insurance.
