CoreWeave's borrowing costs fell from 10% to 7% within a six-month period.

      Applied Digital has successfully secured $1.59 billion in junk bonds with a 7% yield for the establishment of a CoreWeave data center, a significant decrease from the 10% yield demanded six months prior. CoreWeave's credit default swap spreads have also seen a 49% reduction from their peak in December.

      On Tuesday, a subsidiary of Applied Digital raised $1.59 billion through the high-yield bond market to finance a fourth building at its Polaris Forge 1 campus in North Dakota, which will contribute 150 megawatts of computing capacity for CoreWeave under a 15-year agreement. The bonds were issued at a 7% yield, a substantial reduction compared to the 10% yield investors sought for an earlier phase of the project in November. The offering generated demand five times greater than its size.

      The closing of the pricing gap is attributed to a decrease in the cost of insuring CoreWeave's debt against default for five years, which fell to as low as 4.52 percentage points earlier this month from a peak of 8.81 percentage points in December 2025. This 49% drop in credit default swap spreads indicates a significant change in how credit markets evaluate the company’s risk.

      In November, the difference in pricing between bonds linked to Applied Digital’s CoreWeave and those linked to Cipher Digital’s Alphabet was nearly 2.9 percentage points. The recent deal is now positioned less than 1 percentage point above Cipher’s latest bond issuance tied to Amazon, suggesting that the market perceives CoreWeave’s credit risk to be similar to that of projects backed by hyperscalers.

      CoreWeave’s situation has improved due to new significant contracts secured since its peak in December. Notably, Meta has pledged $21 billion for AI cloud capacity through 2032, raising the total committed investment to $35 billion. Additionally, Nvidia contributed another $2 billion in January 2026 at $87.20 per share to enhance a partnership focused on developing over five gigawatts of AI infrastructure by 2030.

      In 2025, the company reported a revenue increase of 168%, reaching $5.13 billion, with projections exceeding $12 billion for 2026. Its contracted backlog now surpasses $66 billion. Co-founder and chief development officer Brannin McBee stated, “We’ve shown we can turn diverse customer demand into deployed infrastructure and long-term revenue.”

      The trend in the sector is clear, as data center developers have raised upwards of $8 billion in high-yield bond sales specifically for projects leased to CoreWeave, according to Bloomberg data. Across the AI infrastructure sector as a whole, issuers have reportedly raised around $30 billion in high-yield bonds this year.

      A broader wave of AI infrastructure borrowers, including Cipher Digital, Mistral, and Edged Compute, are actively engaging with junk bond markets, and the decline in yields indicates that credit investors are growing more comfortable with this asset class.

      Originally established in 2017 as Atlantic Crypto by three commodities traders in New Jersey, CoreWeave began as an Ethereum mining operation. However, following the 2018 crypto crash which significantly decreased mining profits, the founders transitioned their GPU inventory to cloud computing, first serving visual effects and animation, then shifting to AI workloads as demand surged in 2022.

      The company now operates almost 50 data centers throughout North America and Europe, leasing Nvidia GPUs hourly to prominent clients like Microsoft, OpenAI, Meta, and Anthropic. In March 2025, it went public, raising $1.5 billion, marking the largest amount raised in an AI-related listing.

      However, it is essential to note that CoreWeave's total debt currently stands at about $30 billion, tripling its level from the previous year. The company still holds a speculative-grade credit rating, and its credit improvements are relative to its own December peak rather than to investment-grade qualifications.

      Applied Digital's total leasing commitment for CoreWeave at Polaris Forge 1 involves 400 megawatts, with predicted contracted revenue of $11 billion throughout the lease duration. This concentration could pose a single-tenant risk; if CoreWeave's financial health declines, the revenue stream supporting these bonds would be significantly impacted. Whether the issuance of $30 billion in AI data center junk bonds this year represents sound infrastructure financing or signals the beginning of a credit cycle is still to be determined.