Oracle sells $7B in debt to fund Cerner deal; Fitch downgrades credit rating

Oracle has sold $7 billion in debt to fund its purchase of Cerner, Bloomberg reported Nov. 7, after which Fitch Ratings downgraded the company's credit rating.

The tech company sold the bonds in as many as four parts, a person familiar with the matter told the news outlet. The Cerner deal was financed with roughly $15.7 billion in bridge loan debt, which was later reduced when Oracle borrowed about $4.4 billion through a term-loan agreement.

Fitch subsequently lowered Oracle's long-term issuer default rate and unsecured debt from BBB+ to BBB. The company's rating outlook is negative, according to Fitch.

"Today's Oracle deal has been anticipated for months, and we expect healthy participation from the buyside even though it's a company that has been remarkably inattentive to maintaining its credit rating profile," Baylor Lancaster-Samuel, vice president of fixed income at Amerant Investments, emailed Bloomberg. "As recently as 2020, Oracle was rated high A and with the Cerner deal, there was some threat that Oracle could flirt with a BBB- rating at the lowest rung of investment grade."

Three credit rating agencies warned in December that they planned to possibly downgrade the company's investment-grade ratings if it used debt to finance its $28.4 billion takeover of Cerner.

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