AI debt spreads jump 50% as CoreWeave turmoil hits bond market
Why it matters: Higher borrowing costs could slow data center expansion and raise refinancing risks for Oracle and SoftBank.
Stress is spreading through the debt markets that helped finance the AI boom, with investors demanding sharply higher premiums to hold riskier company bonds. Barclays data cited by The Business Times showed spreads on risky AI-linked debt have risen more than 50% in the past six months. The shift accelerated after confidence in CoreWeave deteriorated: the company carries about $72 billion in liabilities tied to 51 data centers, and its bond prices fell hard as traders priced in a greater than 60% chance of default. Bond prices for Oracle and debt insurance tied to SoftBank also came under pressure, raising concerns that financing for costly AI infrastructure could become more expensive and harder to secure.