Pimco is lining up at the center of one of the largest private credit deals of the current AI data‑center boom. The fixed‑income giant is in talks with Bank of America to provide around 14 billion dollars of debt financing for a massive Oracle data‑center campus in Saline Township, Michigan, designed to power OpenAI applications as part of the wider Stargate project. The structure would effectively make Pimco the anchor lender behind a single hyperscale facility, concentrating a long‑dated bet on AI workloads continuing to demand ever more power and rack space.
The total funding package is expected to reach roughly 16 billion dollars, including about 2 billion of equity from Blackstone, with Bank of America leading the design and potential syndication of the debt. The deal is being assembled just as investors are becoming increasingly uneasy about Oracle’s rising leverage, with the stock under pressure this year on concerns that aggressive AI infrastructure spending is stretching the balance sheet. For Pimco and its clients, the appeal lies in the yield on a loan backed by Oracle’s long‑term contracts, but the risk is clear: it is also a leveraged wager that Oracle can manage its growing debt load and that OpenAI‑driven demand will stay strong enough for the campus economics to hold up.
What the financing for Oracle's data centre should look like
According to Bloomberg, Pimco is in talks with Bank of America $BAC about a debt package of about $14 billion that would finance the construction of Oracle's $ORCL data center in Saline Township. If the deal is completed, Pimco will become the lead lender on the project, with some of the risk likely to be spread among other institutional investors.
According to reports, the debt is being considered to be structured as a Rule 144A bond issue, a form of privately placed debt that can be traded by qualified institutional investors. This setup allows the issuer to raise a large amount of funds with a relatively limited pool of investors who are accustomed to dealing with complexly structured debt associated with infrastructure projects.
According to Reuters, developer Related Digital is aiming to close a total of $16 billion in financing for the project, with the debt component led by Bank of America and roughly $2 billion in capital supplied by Blackstone $BX. The negotiations with Pimco add another layer to long-running efforts to secure stable funding sources for the project, despite previous doubts from some partners.
Data centre for OpenAI and part of the Stargate megaproject
Oracle and OpenAI's planned data center in Saline Township is part of a previously announced partnership to deliver additional capacity for the 4.5 gigawatt Stargate project across the United States. According to Oracle, construction is scheduled to begin in early 2026, and the company will ensure the operation of the data center and the integration of the latest technologies for OpenAI's needs once it is completed.
The campus, nicknamed "The Barn" because of the preserved historic red barn at the entrance, will consist of a trio of single-story buildings totaling roughly five hundred and fifty thousand square feet. The data center, with an investment of about seven billion dollars and a projected capacity of approximately 1.4 gigawatts, is to be built on a roughly five hundred and seventy-five acres of farmland south of Ann Arbor.
The project is to be LEED certified and the design calls for minimum building setbacks of seventy-five feet from public roads as well as extensive shading to better integrate the site into the surrounding landscape. Regulators in the State of Michigan have already approved expedited review of contracts with DTE Energy to provide the necessary capacity to connect the data center.
Negotiations continue despite investor concerns
The Oracle data centre project in Michigan has also been met with some scepticism from financial partners in recent months. According to the Financial Times, Blue Owl Capital, which specialises in data centre financing, has decided not to support the project further after negotiations with Oracle stalled.
Oracle responded by saying that developer Related Digital had selected "the best capital partner from a competitive set of options" and that the equity portion of the financing was progressing as planned. A company spokesperson told both Bloomberg and Reuters that Oracle is encouraged by the rapid progress in both financing and site development, and highlighted the ongoing collaboration with OpenAI, Related Digital, Bank of America and other partners.
Oracle's comments reiterate that work on both financing and site preparation is on schedule and that the data center is a key part of the company's broader AI infrastructure expansion strategy. However, it is critical for investors and lenders alike whether the debt structuring can be successfully concluded and the market convinced that the company can finance such a large investment programme without a material deterioration in its credit profile.
Rising debt and pressure on Oracle shares
Aggressive expansion into AI infrastructure is taking a toll on Oracle's balance sheet. Analysts say Oracle shares have fallen more than 25% this year as investors worry about a combination of high capital spending and rapid debt growth. The company has already secured roughly $30 billion through bonds and convertible preferred stock and plans to raise up to another $50 billion in debt and equity.
Extensive investments in data centers have pushed Oracle's free cash flow deep into negative territory, with long-term debt rising to more than $120 billion over the past few years. Credit risk indicators, including the cost of five-year default hedges, are near all-time highs, a signal that the market perceives the risk associated with the company's debt as elevated.
Ratings agencies S&P and Moody's rate Oracle in the investment-grade range, but both companies have previously placed the rating on negative outlook due to the potential for further debt increases. Therefore, the successful closing of financing for the Michigan data center, including Pimco's potential participation, will be an important test of market confidence in the long-term sustainability of Oracle's investment strategy.
Economic benefits for Michigan
The Oracle data center project and OpenAI also have a significant economic impact on the region. According to materials from Oracle and local authorities, the construction of the campus is expected to create approximately two and a half thousand union construction jobs. Upon completion, the complex is expected to directly employ approximately 450 people and indirectly create approximately 1,500 additional jobs in the greater Washtenaw County region.
Oracle has committed to invest millions of dollars in local schools and public infrastructure. The project is estimated to generate about eight million dollars annually for the school district, at least $1.6 million annually in direct tax revenue for Saline Township, and more than fourteen million dollars in direct community benefits. Michigan regulators have already approved the necessary energy contracts, confirming political support for the project at the state level.