CoreWeave, an AI cloud computing company, saw its credit risk climb to a record level on Oct. 15 as weakness in the high-yield bond market intensified. Data from ICE Data Services showed the cost of the company’s five-year credit default swaps, or CDS, rose by as much as 74.5 basis points to 1,194.5 basis points, an intraday record. According to swap-market pricing cited in the report, that level implies a default probability of more than 60% over the next five years. Investor concern was tied to the company’s plan to expand its borrowing further. At the same time, CoreWeave’s bonds ranked among the worst performers in the U.S. junk-bond market on Thursday. The report said the financing boom around artificial intelligence is making bond investors uneasy and prompting a reassessment of credit risk for some large technology companies, reflected in rising credit insurance costs, greater market volatility and weak bond performance. CoreWeave has drawn particular scrutiny because it entered the AI cloud sector relatively early and relies heavily on the high-yield bond market to fund expansion.
CoreWeave’s credit risk climbed to a record high on Thursday as selling in high-yield bonds deepened and the AI cloud computing company moved to expand its borrowing further, raising concern among bond investors.
Data from ICE Data Services showed the cost of CoreWeave’s five-year credit default swaps, or CDS, jumped by as much as 74.5 basis points to 1,194.5 basis points, setting an intraday record. Pricing in the swaps market indicated the company’s probability of default over the next five years was above 60%.
At the same time, CoreWeave’s bonds were among the biggest decliners in the U.S. junk-bond market on Thursday. The financing boom tied to artificial intelligence has unsettled bond investors and pushed the market to reassess credit risk across some large technology companies. That has shown up in sharply higher credit default insurance costs, heavier market volatility and weaker bond performance.
CoreWeave has drawn added attention because it was an earlier entrant in AI cloud computing and has relied heavily on the high-yield bond market to finance its expansion.
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