Pimco aims to support Oracle Corporation's AI ambitions with a $14 billion infusion to ease concerns about "cash flow drought."

According to informed sources, Pacific Investment Management Co. (Pimco) is negotiating with Bank of America Corp to provide approximately $14 billion in debt financing for the construction of a large data center for Oracle Corporation in Michigan. If the deal is finalized, the bond giant will become a major funding source for the Saline Township project. Oracle Corporation plans to provide computational power support for OpenAI in the park. It is reported that this financing may be structured in the form of bonds, and Pimco may also distribute some shares to other investors. Although negotiations with Pimco are still in the early stages, the emergence of the institution marks a new twist in the fundraising race for a project that has been closely watched by Wall Street and local residents, testing investors' willingness to invest in such a large-scale data center. The potential significant debt financing of up to $14 billion, coupled with the approximately $16 billion in financing arranged by Related Digital for the Michigan project, indicates that institutional capital is still willing to provide large, long-term, project-level funding for Oracle Corporation's AI data center project, and that external capital markets are willing to share some of the cash flow pressure of AI infrastructure upfront investment for Oracle Corporation. This is a significant positive development amid concerns that Oracle Corporation may use its own balance sheet to handle massive capital expenditures for pursuing orders for OpenAI/"Interstellar Gateway" data center projects, leading to sustained pressure on free cash flow expectations. Bank of America Corp has been raising funds for the project developer Related Digital for several months. According to previous reports, Blackstone Inc. also plans to invest an additional $2 billion in equity. Representatives of Related Digital, Pimco, and Bank of America Corp declined to comment. A spokesperson for Oracle Corporation said the company is proud of the "rapid progress" made in financing and development for the facility in Saline Township, and noted that the company is collaborating with OpenAI, Related Digital, and Bank of America Corp on this project. According to informed sources, the financing may be structured using the so-called 144A provisions. Such bonds are private debt securities that can be traded among specific institutional investors. For Pimco, this will be the second time in the past year to provide significant financing for data centers, helping the investment management company further expand its presence in the private credit sector. Last year, Pimco agreed to collaborate with Blue Owl Capital Inc. to finance Meta Platforms Inc.'s Hyperion data center project in the Livingston Parish of Louisiana. As the lead financing party in the transaction, Pimco held $18 billion in debt at pricing. Subsequently, as debt prices soared, the company quickly gained $2 billion in book profits. The financing arrangements for the Saline Township project followed loan institutions building financing packages for other large data centers of Oracle Corporation, including a $38 billion debt deal for facilities in Texas and Wisconsin, and a $18 billion project financing in New Mexico. Oracle Corporation on Monday appointed Schneider Electric SE executive Hilary Maxson as its chief financial officer to help the company address the challenges posed by its vast development plans and the resulting financial strain.