CoreWeave bond yield tops 16% as AI credit stress rises | Hacker News Reader

CoreWeave bond yield tops 16% as AI credit stress rises

cnbc.com

48 pointslxm16 comments

Just last week I was on the call with a a techy architect from one of the major-major financial services companies, and he was discussing getting token capacity and his words on third best option was "we'd get it from Coreweave or whoever is still alive". So yeah, I am pretty sure that if that's the sentiment from software people at the major-major financial company, Coreweave is cooked.

Aside from the price signal, the fact they were issuing these at a 9.625% coupon rate continues to run up their future debt servicing costs.

Coreweave doesnt seem to be in a winner-take-all sector, they have a narrow moat and will have high ongoing capex. I struggle to see how they dont go under eventually even with the ability to restructure debt

So there’s a chance I can pickup some discounted GPUs next year?

If you can out-bid the Chinese.

No, the other neoclouds will scoop up the remains. The H100 was released 4 years ago and its still near impossible to find at any discounted price.

It almost reads like a semiconductor process report.

totally crazy that Google has bonds yielding 5.68%

That's a great return for practically zero risk.

(If google defaults on bonds there's much bigger problems in the world than the loss of your capital)

So much low-risk debt has been issued by the likes of Google, Amazon, etc. that it’s hard for other debt issuers to compete.

The treasury is having daily rates of 4.56% at 2 year bond and 4.88% at 10 years rate.

Yes, Google has a very small risk but still it is a non zero risk that google can bankrupt whereas US govt can physically not bankrupt itself given that it can print the money (there could only be some gridlock within raising the ceiling though but that's true)

Also I would argue that Google itself has changed with trillions of dollars spent into AI/Datacenters, it simply can't pivot as well. There is a reason as to why Google is having such high level of interest rate

Google isn't stupid and wants to give such high level of interests if not for the amount of risk involved. I dont believe that there's free lunch but also that perhaps this can be a good deal to some and this is gonna push people even more away from the more riskier neoclouds funding and cause their debts to rise in interests rate even more.

US 10y bonds are at 4.871, which is lower but fits your description even better.

That being said, inflation is at 3.7% YoY and it's the real rate that maters, not the nominal one.

The yield is bounded from below by the treasury yield, which is just a little lower - and with the treasury you have really big problems if they default! But realistically the US will inflate its currency rather than default, so the yield is really just reflecting expected future inflation. It’s not as great a deal as it seems. Bonds are probably the most fairly priced assets in the world.

Now let's see Anthropic sell enough of its junk bonds to cover its half a billion in non-cancelable obligations.

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