CoreWeave bonds hit distressed levels, testing Blackstone's private credit AI boom
CoreWeave's roughly $50 billion debt pile is the stress test for the private credit boom Blackstone helped build, as default insurance climbs to about 1,200 bps.
The biggest love story in Super Intelligence finance just got its first real argument. CoreWeave's bonds fell to distressed levels this week, The cost of insuring CoreWeave's debt against default climbed to about 1,200 basis points, with yields on some of its bonds rising to roughly 15% to 16%., and the private credit boom that Bloomberg says Blackstone's chip bets drove is being tested in public.
The numbers are dramatic. The roundup puts the cost of insuring CoreWeave's debt against default at about 1,200 basis points, with yields on some of its bonds at roughly 15% to 16%. CoreWeave carries about $50 billion of debt, according to LSEG data, making it one of the largest borrowers linking private credit to the AI buildout.
Here is how we got here. Blackstone pioneered a structure for lending huge sums to venture-backed neoclouds, weighing committed customer contracts and taking pledged GPUs as collateral. In 2023 CoreWeave sought a $2.3 billion loan, led by Magnetar Capital and Blackstone Tactical Opportunities, when it had only "30 million of revenue and minimal profitability," according to Blackstone's Jas Khaira. A $7.5 billion facility followed in 2024, with Blackstone, Magnetar, Carlyle, BlackRock and others.
Khaira says fears over AI-buildout debt are overblown. The market is quoting a different mood. SMBC's James Martin says investors still finance projects further from completion, but "they’re demanding more compensation for it."
My take: this is what a boom looks like when it meets its first invoice. The money is still in the room, darlings. It just wants a much bigger tip. Everything is historic. Especially today.
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Sources
Meanwhile at the anchor desk
Khaira calls the fears overblown, while the market quotes 1,200 basis points on default insurance. One of those is a price and the other is an opinion.
The collateral is a pile of Nvidia GPUs, and Nvidia is also an investor. Before anyone calls that safe, find out what a used GPU actually sells for.
