Cost of AI default insurance spikes as data centre confidence wobbles
QQQ•Credit default swap spreads widened to record levels for Oracle and other technology companies as investors questioned whether AI investments will generate profits quickly enough to cover rising debt costs. CoreWeave’s spreads exceeded 1,000 basis points, and its 2032 debt traded at 77 cents on the dollar.
1. Insurance costs rise
Five-year credit default swap spreads for Oracle widened 26 basis points overnight to a record 288 basis points. Spreads for SoftBank widened 24 basis points to 424 basis points, while CoreWeave’s rose above 1,000 basis points.
2. CoreWeave debt weakens
CoreWeave, a loss-making data-centre operator that owes nearly $50 billion, saw its 2032 debt trade at 77 cents on the dollar. Its shares fell 15% on Wednesday and another 6% after market. Spreads for Amazon, Alphabet, Meta and Nvidia also reached record wides, though they remained much smaller than Oracle’s.
