AI computing power infrastructure "burns money" without stopping, CoreWeave (CRWV.US) issued debt twice in a week.

CoreWeave (CRWV.US) has announced that it will issue $1 billion of senior unsecured notes with a face interest rate of 9.75%, which will mature in 2031. According to sources familiar with the matter, due to strong demand in the secondary market, the pricing range for these bonds is between 101.5 and 102 cents on the dollar, with pricing potentially to be completed as early as Thursday. JPMorgan, Morgan Stanley, and Goldman Sachs Group, Inc. are serving as the joint book-running managers for this issuance. Just one week ago, CoreWeave completed its first bond issuance, raising $1.75 billion. Based on Trace's pricing data, the price of these initial bonds quickly climbed above 102 cents on the dollar after issuance, showing a significant premium over face value. The strong demand in the secondary market has opened the door for the company to once again increase its financing within a week. Due to strong investor demand, just one week after completing the $1.75 billion initial bond issuance, artificial intelligence cloud infrastructure company CoreWeave is tapping into the US junk bond market once again. The increase in issuance of $1 billion in senior notes at a premium is a balancing act between the company's revenue backlog of up to $66 billion and its large-scale debt, reflecting the continued heating up of the financing trend for AI infrastructure. The "steel wire rope" logic behind high-interest borrowing As a company that provides high-end artificial intelligence processor leasing services, CoreWeave's business model has a distinct "asset-heavy" feature: it purchases high-end GPU chips from NVIDIA Corporation on a large scale and uses these chips as collateral to obtain debt financing, subsequently building data centers and leasing computing power to tech giants such as Microsoft Corporation, Meta, and OpenAI. This "using chips to pay debts and using debts to expand computing power" strategy requires the company to maintain a high frequency of external financing to support its massive capital expenditures while its revenue grows rapidly. CoreWeave stated in its announcement that the proceeds from this increase in issuance will be mainly used to repay outstanding debt and for general corporate purposes. This statement is underscored in its latest financial data. The financial report shows that as of the end of the fourth quarter of 2025, total liabilities increased by approximately $7.5 billion. However, most of these liabilities were still in financial form on the balance sheet by the end of 4Q, resulting in a net interest-bearing liability increase of approximately $3.4 billion. Even so, the proportion of interest expenses to revenue continued to increase from 23% in the previous quarter to 25%. The pressure from future debt repayment is expected to grow. Meta's super-sized orders exacerbate the demand for funds CoreWeave's eagerness to return to the bond market is directly related to its continuously expanding customer orders. Last week, the company announced a $21 billion agreement with Meta Platforms (META.US) to provide artificial intelligence cloud capacity. Combined with a previous agreement worth $14.2 billion, CoreWeave's backlog of contracts from Meta has significantly increased. Management expects that as customer diversification progresses, the proportion of total revenue from any single customer will decrease to below 35%, but currently, Microsoft Corporation still accounts for about two-thirds of its revenue share. Market analysts point out that CoreWeave's revenue backlog of around $66 billion provides strong visibility for future cash flow, which is one of the core logics that junk bond investors are willing to take on corresponding credit risks at a high 9.75% yield. Industry mirror: Alphabet Inc. Class C-related project simultaneously launches a $5.7 billion "jumbo" transaction CoreWeave's intensive bond issuance is not an isolated event. According to another source familiar with the matter, a data center project related to Alphabet's (GOOGL.US) Alphabet Inc. Class C company is also planning to raise $5.7 billion through junk bonds this Thursday. If successful, this will be the largest data center-related junk bond transaction to date. Reportedly, this transaction led by Morgan Stanley has a yield of about 6.25% to 6.375%, significantly lower than CoreWeave's nearly 10% financing cost. The difference in interest rates between the two is mainly due to the different credit endorsements-Alphabet Inc. Class C's related project enjoys a higher safety margin due to its direct affiliation with tech giants. Although the conflict in the Middle East briefly caused some borrowers to pause, as optimism for a peace agreement rises, the borrowing costs for American companies have generally fallen. Fueled by the AI arms race, Wall Street is directing high-yield bond funds to the computing power infrastructure at an unprecedented speed.