Moody's downgrades Oracle bond outlook

Moody's Investors Service has downgraded its outlook on Oracle bonds to "negative," citing the company's hostile takeover bid for rival software maker PeopleSoft.

Moody's said the bid, a cash offer worth about $5.1 billion, would require "substantial use of cash and additional bridge financing." The investment service also thinks that the hostile takeover "is likely to lead to a protracted takeover battle and that Oracle will likely have to increase the per-share offer price in order to complete the tender offer." Additionally, Moody's predicts that Oracle will suffer a reduction in its "financial flexibility" as a result.