Oracle Corp.

The negative outlook reflects our view that given the lack of clear financial policy guidance from management, the current pace of share repurchases will continue in fiscal 2020, and that adjusted leverage could climb to near 2x area as a result. We could lower our issuer credit rating on Oracle if the company's adjusted leverage exceeds 2x over the next two years as the company engages in large share repurchases. A debt-funded acquisition that pushes leverage over the same level would also be a cause for a downgrade. We would consider revising the outlook to stable if Oracle's adjusted leverage settles at comfortably less than 2x and we believe that it can be sustained there. Global GDP growth of low-to-mid

...Oracle Corp.'s adjusted leverage continues to climb as it engages in large share repurchases.Oracle Corp. has significantly ramped up shareholder returns since the passage of U.S. tax reform, with share repurchases totaling $36 billion in fiscal 2019. Although it has repaid maturing debt during this period, the shareholder returns in excess of free operating cash flow have led to $18 billion in net debt, up from $6 billion in net cash a year ago and $14 billion in net cash in mid-2017. Under our base-case scenario, which assumes share repurchases of $6 billion per quarter over the next four quarters (similar to the fourth quarter of fiscal 2019) we estimate that Oracle's adjusted leverage could reach almost 2x by year-end fiscal 2020....

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