CoreWeave, the Nvidia-backed AI cloud-computing provider, carries about $50 billion in debt, and its bond yields now exceed 15%. Junk bond investors have paused funding for AI startups, and market participants appear to see a higher risk of bankruptcy.
CoreWeave's debt load of approximately $50 billion and its inability to achieve profitability have pushed its bond yields above 15%, according to Bloomberg Markets. Default-insurance costs on the company are rising as well.
Junk bond investors pull back from AI funding
Junk bond investors have paused funding for AI startups, which reflects concerns over the sustainability of debt-financed AI infrastructure.
AI-related debt issuance fell from $113 billion in June to $23 billion in September, which suggests a tightening of credit conditions for highly leveraged AI companies.
CoreWeave points to its backlog
CoreWeave asserts a robust backlog that outweighs its debts, according to the report.
Even so, yields surpassing 15% indicate severe credit stress, consistent with a heightened risk of default or restructuring. Market activity also suggests participants see a higher likelihood of a bankruptcy announcement by December 31, 2027.
Source: Crypto Briefing
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