CoreWeave’s (CRWV) credit risk reached an all-time high on Thursday, per data from the Intercontinental Exchange, reflecting investors’ rising concerns over the feasibility of the debt profile at the leading “neocloud” provider.
The price of CoreWeave credit default swaps, essentially a form of insurance against default risk, rose by 74.5 basis points to price in 60% odds that the company will default on its debt within the next five years, per Bloomberg.
At the same time, some of CoreWeave’s bonds continued to slide further, as 9% notes fell to trade at 80.75 cents on the dollar with a yield of 15.3% as investors demand a premium to hold the debt.
That said, shares in the stock began to reverse course through Thursday trading after a sharp move downward in the previous session, in the red by roughly 2% near 12:30 p.m. ET on Thursday.
The selloff has prompted a wave of red movement in the neocloud and wider data center and semiconductor complex as fears have grown over the financing models employed to fund the AI buildout.
“When you are building a new type of technology company there will be periods of time when the market misunderstands and acts irrationally,” CoreWeave said in a statement to Yahoo Finance. “We are confident in our business model, our customers, the extraordinary quality of our execution, and the relentless discipline around the financial engine we have built.”