Debt markets are warning AI data center builders that borrowing costs are rising and credit limits may tighten. Jefferies global head of equity strategy Christopher Wood wrote that the AI capex arms race could end when "the credit card will be taken away."
The poster child for debt stress is neocloud CoreWeave, whose 2032 bond with a 9.625% coupon now yields above 16%. Its five-year credit default swaps spiked above 1,289 basis points before easing to around 1,155.
Even healthy issuers are seeing higher default insurance costs. CDS on Nvidia debt is up 76% in a month, Broadcom up 49%, and Amazon.com up 44%. Nvidia's spread remains around 139 basis points versus roughly 1,100 for Core Weave.
Goldman Sachs estimates moratoriums could impact 45% of planned U.S. data center capacity, much of it in Texas, where governor-elect Gina Hinojosa wants a pause until legislative protections pass. Bank of America projects AI-related credit issuance will rise 31% from 2026 to 2027, hitting $685 billion.
Source: Hacker News · Summarized by HeadlinesBriefing