Debt-hungry AI companies face increased risk as bond yields spike — SkimNews
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- Treasury yields climbed to their highest level since 2007, with the 10-year sitting near 5.17%—up roughly 1 percentage point year-to-date—raising borrowing costs across the AI infrastructure stack.
- JPMorgan Chase estimated in June that $4.1 trillion in AI-related debt will be issued through 2030 to fund data center and capacity expansion, making the sector acutely exposed to rate moves.
- SoftBank raised $11.1 billion in a junk-bond sale this week with yields as high as 9.75% on the 7-year tranche; Siebert Financial's Mark Malek called the company "price insensitive" and a "price taker" in the current market.
- CoreWeave warned in its latest quarterly SEC filing that every 100-basis-point rate increase could add $30 million to its interest expense based on its June floating-rate debt balance.
- Oracle sent a "force majeure" notice tied to its New Mexico Project Jupiter data center, per Bloomberg, to shield itself from higher expenses—the stock fell 7% on the week and roughly 30% year-to-date.
- Hyperscalers Amazon, Google, Meta, and Microsoft have committed hundreds of billions in 2025 capital expenditures but hold investment-grade ratings, giving them cheaper capital than the roughly 50 neoclouds competing behind them.
- Lenders are getting more selective, with Mitsubishi HC Capital America's Riley Thompson telling CNBC that of roughly 50 neoclouds, only about 20 are drawing serious market interest.
- Oracle shares fell 7% on the week and roughly 30% year-to-date while CoreWeave rose almost 8% this week, showing uneven investor tolerance for debt-heavy AI plays.
Why it matters: The rate math reshuffles who can fund the AI buildout: hyperscalers with investment-grade ratings keep cheap access, but neoclouds reliant on floating-rate debt—like CoreWeave, where each 100 bps adds $30 million in interest—face a real cost squeeze, as evidenced by Oracle's force majeure notice on Project Jupiter and SoftBank paying 9.75% on a 7-year tranche.
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