CoreWeave’s expanded borrowing plan sparks market unease, with high-yield bonds continuing their decline.
48 minutes ago
Amid intensifying declines in high-yield bonds, credit risk for AI cloud computing firm CoreWeave hit an all-time high on Thursday. The company’s plans to further expand its borrowing scale have sparked concerns among bond investors. Data from ICE Data Services shows that the cost of CoreWeave’s five-year credit default swaps (CDS) rose by 74.5 basis points at one point to 1,194.5 basis points, marking an intraday all-time high. This means the swap market pricing reflects that the company’s default probability over the next five years exceeds 60%. Meanwhile, CoreWeave bonds were among the biggest decliners in the U.S. junk bond market on Thursday. The financing boom in the AI sector is unsettling bond investors, prompting the market to reassess credit risks for some large tech firms, as evidenced by surging credit default insurance prices, heightened market volatility, and weak bond performance. As an early entrant in the AI cloud computing space that relies heavily on the high-yield bond market to fund business expansion, CoreWeave has drawn particular attention.
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