CoreWeave bonds slip into distressed territory amid AI debt fears
Original title: CoreWeave’s debt is becoming the whole AI industry’s problem
Shares fell more than 20 percent, and the company reported more than $35 billion of debt.
The Verge reports CoreWeave bonds entered distressed territory last week after yields rose 1,000 basis points above government bonds, and shares fell more than 20 percent since Tuesday’s close. As of second-quarter earnings, CoreWeave owed more than $35 billion and lost more than a billion dollars in the first half, while reporting $103.7 billion of remaining performance obligations. Microsoft, OpenAI and a third customer the company does not name generated almost three-quarters of second-quarter revenue. Oracle shares fell almost 10 percent over the same period, with a sell-off in Oracle bonds.
Unconfirmed: The unnamed third-largest customer is only suspected to be Nvidia, and bubble claims are the author’s opinion.
- Cofounder Brannin McBee told the Financial Times the firm wants investment-grade debt.
- About 40 percent of remaining obligations are due in 2028.
- Contracts generally cannot be cancelled except in limited circumstances.
- The author says a falling share price is not proof the AI boom is ending.
From the original article
3 min read at theverge.com
CoreWeave had a bad week last week. Its bonds slipped into distressed territory by a common definition - when investors demand 1,000 basis points more in yield than they'd get from government bonds. Last Tuesady Chamath "SPAC King" Palihapitiya noticed the distressed debt, and also asked whether the AI buildout was a private credit bubble.
By Elizabeth Lopatto · theverge.com
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