CoreWeave credit default swaps hit distress levels as investors sour on AI debt — SkimNews
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- CoreWeave's five-year CDS spread soared above 1,140 basis points before settling near 1,038 bps — a 16% week-over-week jump and 164% higher than a year ago, with Gavan Nolan of S&P Global Market Intelligence noting that spreads above 1,000 bps signal credit distress.
- CoreWeave's 9.75% bond due 2031 hit a 15.78% yield to maturity while the company carries more than $51 billion in debt and obligations to finance its AI infrastructure build-out.
- CoreWeave stock plunged 15.5% on Wednesday before recovering to close 5.94% higher Thursday, after CEO Mike Intrator dismissed the moves in a memo and pointed to a $100 billion-plus backlog with Microsoft, Meta, IBM and Caterpillar as counterparties.
- Oracle's five-year CDS spread spiked to 282 basis points — roughly 10% in one week — prompting Deutsche Bank's Jim Reid to warn that a BBB rating downgrade could force investment-grade-only investors into forced selling.
- Evercore ISI's trading desk said the market is "basically saying 'no mas' to AI debt without operating cash flow support," framing CoreWeave's deeply negative free cash flow as the central concern despite demand for its services.
- Deutsche Bank reiterated its buy rating on CoreWeave, calling the dislocation a buying opportunity and noting that roughly two-thirds of the backlog sits with investment-grade counterparties.
Why it matters: CoreWeave's $51 billion debt load now trades at distress-level spreads (1,038 bps) against a $100 billion backlog, but with the company burning free cash flow, a downgrade cycle could force capital raises or asset sales. Oracle's parallel CDS spike to 282 bps shows AI debt contagion is already reaching hyperscaler counterparties like Microsoft.
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