S&P Global Ratings downgraded Oracle's long-term issuer credit rating from BBB to BBB- in July, and also lowered its short-term rating, placing it just one notch above junk status. Moody's Ratings also has a negative outlook on the company, signaling a potential for further downgrades. This downgrade primarily reflects S&P's underestimation of the investment required for Oracle's AI infrastructure build-out, with its cloud infrastructure business projected to grow from 27% of revenue in fiscal year 2026 to nearly 60% by fiscal year 2028, which is considered riskier than its traditional software business. Additionally, Oracle's five-year credit default swap spread rose to approximately 219 basis points in late July, its highest level in years, indicating that bond investors are demanding a higher premium to hold its debt. Oracle's free cash flow for fiscal year 2026 was negative $23.7 billion, and its total liabilities surged from $147.4 billion to $218.7 billion within 12 months.