CoreWeave's bond yield tops 16% as AI's credit card gets pricier
CoreWeave bond yield tops 16% as AI credit stress rises
Debt markets are pushing back on the AI data center boom. CoreWeave's 2032 bond now yields above 16%, and its five-year credit default swaps spiked past 1,289 basis points, while default protection costs also climbed for Nvidia, Broadcom, and Oracle. Goldman counts $296 billion in hyperscaler debt issued this year and forecasts $440 billion next year, but new Democratic governors in Ohio, Texas, and Georgia could stall projects covering up to 45% of planned U.S. capacity.
The most plausible way the AI capex arms race will end is that the credit card will be taken away.
- danielodievich
Just last week I was on the call with a a techy architect from one of the major-major financial services companies, and he was discussing getting token capacity and his words on third best option was "we'd get it from Coreweave or whoever is still alive". So yeah, I am pretty sure that if that's the sentiment from software people at the major-major financial company, Coreweave is cooked.
- dragontamer
CRWV is about to have an earnings report in less than 20 hours. It's probably best to just shut up for a day, wait for the earnings and then talk after that comes out.
- trescenzi
That’s edging up on credit card rates for strong borrowers wild. NerdWallet has Chase Freedom with a lower bound of 18.49% and Citi Diamond Preferred with 16.74%.
- bix6
So there’s a chance I can pickup some discounted GPUs next year?
- holysoles
Aside from the price signal, the fact they were issuing these at a 9.625% coupon rate continues to run up their future debt servicing costs.
Coreweave doesnt seem to be in a winner-take-all sector, they have a narrow moat and will have high ongoing capex. I struggle to see how they dont go under eventually even with the ability to restructure debt
- laylower
One of the cras published a report on the potential upcoming AI stress and it did highlight a bunch of vulnerabilities.
Just checked and coreweave rated at bb-
- cmiles8
This is a preview of what AI companies will face moving forward trying to raise capital. 16% is cheap if AI lives to its promise of massive returns. Problem is the ROI isn’t materializing and 16% would destroy most companies.
Meanwhile the traditional VC path is also drying up with OpenAI struggling with its latest round.
It’s going to get very ugly for the AI bros as cash starts to run out.
- Animats
They started at 9.6%. So it was a junk bond when it was issued. Now it's junkier.
Where is this bond in the bankruptcy hierarchy?
Is it secured by anything? GPUs, maybe. Is it subordinated behind other debt?
That's probably going to matter.