CoreWeave bond yields hit 15% in what analysts call a 'Darwin moment' for the AI debt boom

CoreWeave's bonds, originally priced in June at a yield of 9.675%, have tumbled to 15% this week, sparking a broad sell-off in AI infrastructure stocks and unsettling credit markets around the world. Max Frumes, global head of distressed and leveraged finance at 9fin, described CoreWeave as "the canary in the coal mine" and cautioned that other AI-linked debt would slide into distressed territory. Asian equities recovered ground on Friday after the heaviest selling subsided, though analysts caution that volatile conditions may persist as major tech earnings approach.

CoreWeave is carrying roughly $50 billion in debt to finance data centre expansion, and yields on some April-issued notes climbed above 16% at the height of the sell-off.

Nvidia chief executive Jensen Huang intervened to defend CoreWeave, telling reporters in Stockholm 'their cost of capital is actually decreasing' — though he ruled out a Nvidia bailout.

Fund manager James Harries warned the AI capex cycle is 'probably the greatest the world has ever seen' and that a large amount of that spending is likely to be misallocated.