Key facts
- CoreWeave's $2.75 billion of 9.75% bonds issued in April were trading at 81 cents on the dollar.
- CoreWeave shares plunged 15.5% on Wednesday.
- The spread on CCC-rated bonds jumped to 12.67 percentage points above Treasurys on Tuesday, from 9.04 percentage points in early May.
Junk bond buyers are increasingly hesitant to finance tech startups, with CoreWeave Inc.'s financial struggles raising broader questions about AI companies' funding strategies. CoreWeave's bonds have experienced a steep selloff, trading at 81 cents on the dollar and yielding over 15%, a level typically indicating distress. The company's shares also plunged 15.5% on Wednesday. This selloff in CoreWeave's debt is being watched as a potential indicator for the wider high-yield market, particularly for AI-related borrowers. The spread on CCC-rated bonds, a low rung of junk debt, has widened significantly, reflecting increased investor caution. CoreWeave stated its financial position "more than supports" its debt obligations and that it is confident in its funding.