Goldman Sachs Group, Inc.: AI debt "barometer" stabilizes! Oracle Corporation (ORCL.US) sets record for bond issuance, expected to stimulate tech borrowing boom.

According to the underwriting department of Goldman Sachs Group, Inc., Oracle Corporation's record-breaking latest bond transaction has relieved the tense atmosphere in the debt market and provided motivation for other tech giants looking to raise billions of dollars for data center infrastructure construction. Previously, concerns about the massive amount of funding - estimated to be as high as $5 trillion - needed for expansion projects had raised worries about oversupply in the debt market. Oracle Corporation raised $25 billion in bonds in the high-quality bond market on Monday, attracting many investors eager for returns. Subscriptions exceeded $129 billion, setting a record for such issuances, making it a positive sign. Goldman Sachs Group, Inc. was one of the Wall Street banks involved in this transaction. John Sales, head of Americas investment-grade bond underwriting at Goldman Sachs Group, Inc., said in an interview, "Everyone is talking about record supply, but I think what's more interesting is the record demand." Despite global public syndicated bond issuances surpassing $1 trillion at the fastest pace in history after Oracle Corporation's bond issuance, the additional compensation investors are demanding to bear the risk of corporate bonds is nearing its lowest level in nearly 30 years. The issuance of U.S. high-grade corporate bonds exceeded $200 billion last month, making January one of the highest issuance months on record. Oracle Corporation, the lowest-rated among cloud computing giants, has become a bellwether for artificial intelligence investments. Due to recent trading prices of its debt being closer to junk bonds rather than investment-grade bonds, this database giant has indicated that it does not plan to issue new bonds after 2026, alleviating some pressure. Sales said this was a cleansing moment for the market, removing a major issuer from the supply chain and reducing the likelihood of Oracle Corporation's debt being downgraded in the short term. Sales stated that the risk premium on some of Oracle Corporation's bonds increased by 25 basis points from Sunday evening to early Monday morning before the company announced the bond issuance. Investors still perceive risks in artificial intelligence investments. Concerns surrounding artificial intelligence trading have heightened, leading to the Nasdaq 100 index losing over $1 trillion in value in a week. Large tech companies issuing a large amount of bonds may further widen spreads in the industry and the market. Currently, most of Oracle Corporation's newly issued bonds are trading higher on the secondary market. Overall, the credit market remains optimistic. Sales stated, "The market is wide open. From a spread standpoint, things are very good. From a demand perspective, as evidenced by Oracle Corporation's order volume, things are also very good." Other massive data center operators may also enter the market soon after the end of earnings season. Amazon.com, Inc. plans to invest $200 billion in data centers this year, while Alphabet Inc. Class C, the parent company of Alphabet, expects its capital spending to reach up to $185 billion, both of which exceed analysts' expectations. Meta Platforms and Microsoft Corporation have also announced their performance, meaning they could issue bonds. According to data, Goldman Sachs Group, Inc. has led approximately 6.8% of U.S. investment-grade bond sales (excluding self-led transactions) this year, making it the fifth largest underwriter. Sales personnel also anticipate a concentrated period of supply in the market in the coming months and quarters as the issuance window opens after earnings releases, with a large influx of acquisition-related transactions expected.