Bond traders dialed back measures of credit risk associated with Nvidia Corp. on Tuesday after the company said it would limit its exposure in a $500 billion plan to finance AI investments driving demand for its chips. The yields on Nvidia’s 5.625% bonds due 2056 slipped to 113 basis points above Treasuries, a decline of 2 basis points, while five-year credit default swaps narrowed as much as 5 basis points to 72.11 basis points a year, according to ICE Data Services.

“Nobody knew what the $500 billion potential financing meant,” said Sal Naro, chief investment officer of Coherence Credit Strategies. “Today you have an idea that they’re getting everybody involved and that their exposure isn’t as serious as investors originally feared.” In a post on X, CEO Jensen Huang said the company’s support would extend to “up to 25% of an opportunity, assessed carefully on a project-by-project basis.” He said that support is limited and residual-value based, designed to complement — not replace — independent underwriting.

That clarification eliminated some of the uncertainty associated with the plan, which also involves Apollo Global Management Inc., Blackstone Inc., Black Rock Inc., Brookfield Asset Management, Goldman Sachs Group Inc. and KKR & Co. The chipmaker is among tech giants tapping the US investment-grade market at an unprecedented pace to finance AI initiatives, which has fanned periodic fears about the outlook for the company’s sales if big tech companies eventually scale back spending.