CoreWeave Bond Yield Reaches 15.7% as French Borrowing Costs Rise

A jump in CoreWeave’s borrowing costs and a widening French-German bond spread show how high rates are raising financing expenses for AI infrastructure and governments.

CoreWeave’s 9.75% bonds due in 2031 briefly yielded 15.7%, after reaching a low of 8.89% in May. Their spread over U.S. Treasurys widened from 472 basis points to a peak of 1,071, then eased to about 986. The five-year credit default swap spread closed at a record 1,117 basis points, implying a 63% probability of default within five years.

The figures add to concerns about CoreWeave’s financing plans. The company borrows to buy Nvidia GPUs and build data centers, then depends on long-term contracts with Microsoft, OpenAI and Meta to recover its investment.

About $14 billion in junk-rated bonds support data centers whose sole tenant is CoreWeave. That structure links the facilities’ financing to the credit of a company that also relies on debt to fund its expansion.

AI Borrowing Costs Vary by Company

Borrowing costs on 30-year dollar-denominated AI bonds vary widely. Oracle’s spread was about 300 basis points, SpaceX’s about 250, and Meta and Google’s roughly 170 to 180. Other leading technology companies were clustered around 100 to 130 basis points.

That gap reflects how lenders price the amount a company needs to borrow relative to its balance sheet. CoreWeave’s higher costs show how financing pressure can build quickly for a growing company that must raise capital for infrastructure while relying on future customer revenue to recoup that spending.

France Pays More to Refinance

France is also facing higher borrowing expenses as investors seek greater yields. The country’s 30-year bond yield rose as much as 130 basis points from its level before the Iran war began and remained about 115 basis points above that level on Oct. 19. Germany’s yields increased about 45 basis points over the same period, and the spread between French and German 10-year bonds reached 142 basis points. The widening gap adds to concerns about French government debt.

Higher yields increase France’s cost of issuing new debt and refinancing existing obligations. Japanese investors hold about 23 trillion yen ($145 billion) in French bonds, but higher yields at home have reduced the advantage of holding French debt after currency hedging, prompting investors to pull back.

Looser fiscal policy and continued AI capital spending are two forces pushing long-term yields higher. Government borrowing adds to the supply of bonds, while AI expansion requires substantial long-term financing and supports expectations for economic growth.

That dynamic could shift if high borrowing costs slow AI investment. Less AI spending could reduce demand for long-term financing and weigh on growth expectations, easing pressure on long-term yields. The trade-off would be slower investment and adjustments to asset valuations and revenue expectations across the AI sector.