As the default risk of CoreWeave soars to a record high, with the implied default probability over the next five years in the credit market exceeding 60%, NVIDIA CEO Jensen Huang stepped in to "put out the fire," stating that CoreWeave's financial strength is continuously improving and its financing costs are declining, thus there is no need for NVIDIA to provide a guarantee for it.
On Thursday, October 15th, Eastern Time, the spread of the five-year credit default swap (CDS) CDS, which reflects a company's cost of debt default protection, rose by 74.5 basis points to reach 1,194.5 basis points, setting a new intraday high. At the same time, the yield on some of the company's bonds soared to over 15% to 16%, reflecting a sharp increase in investors' concerns about its ability to repay debts.
During an event in Sweden, Jensen Huang stated in an interview with the media: "The strength of CoreWeave is growing day by day." He expressed an optimistic attitude towards the company and pointed out that its "capital costs are actually declining." Regarding the market concern over whether NVIDIA needs to provide financial support for CoreWeave, Jensen Huang clearly stated that he does not see the necessity for it.
However, the market did not dispel its doubts as a result. On Thursday, CoreWeave ( CRWV ) opened significantly lower by 6.6%, and the decline widened to 9.5% in the early session. Subsequently, the decline gradually narrowed by more than half, but it will still close down for the fourth consecutive trading day, with the cumulative decline over the four trading days of this week exceeding 20%.
What is more concerning is that the tension in the credit market is spreading, indicating that investors are re-evaluating the debt risks underlying AI infrastructure investments. The media reports that Oracle's five-year CDS yield spread approached 300 basis points on Thursday and increased by about 31 basis points this Thursday, which is at a historical high compared to the related yield spreads of Amazon, Google's parent company Alphabet and Meta; SoftBank's five-year CDS yield spread expanded by 24 basis points in one day; the CDS yield spreads of NVIDIA, STMicroelectronics, and SpaceX also rose significantly.












