CoreWeave bond yield tops 16% as AI credit stress rises

Credit markets are signaling that financing the AI infrastructure boom is becoming more expensive. CoreWeave, a debt-heavy provider of cloud computing for AI, is the clearest warning: the yield on its 2032 bonds has risen above 16%, and the cost of insuring its debt against default briefly topped 1,289 basis points. Default protection has also become costlier for larger technology companies, with credit-default-swap spreads up sharply over the past month for Nvidia, Broadcom, and Amazon. Their risks remain far below CoreWeave’s, but the increases suggest investors are seeking more protection and may demand higher rates from AI borrowers.

The pressure reflects both political uncertainty and the scale of borrowing needed to build data centers. Potential project delays or moratoriums in Ohio, Texas, and Georgia could affect a substantial share of planned U.S. capacity; Goldman Sachs estimates that restrictions could touch 45%. Yet borrowing has not stopped: hyperscalers issued $296 billion in debt this year, and Goldman projects $440 billion next year, alongside more project-level financing. The central concern is whether AI companies can turn investment into enough cash to support further expansion. Hyperscalers reported negative free cash flow in the third quarter, while rising purchase commitments add to future cash needs. Bank of America expects AI-related credit issuance to peak in 2027 before declining, with a political-driven slowdown in infrastructure spending a key downside risk.