CoreWeave's borrowing expenses have decreased from 10% to 7% over the span of six months.

      TL;DR: Applied Digital secured $1.59 billion in junk bonds at a 7% yield for a CoreWeave data center, a decrease from 10% six months prior. CoreWeave’s credit default swap spreads dropped 49% from their peak in December.

      A subsidiary of Applied Digital raised $1.59 billion in the high-yield bond market on Tuesday to finance a fourth facility at its Polaris Forge 1 campus in North Dakota. This new building is expected to deliver 150 megawatts of computing capacity for CoreWeave under a 15-year agreement. The bonds were issued with a yield of 7%, down significantly from the 10% that investors sought in a previous portion of the project in November. The offering attracted demand that was five times its amount.

      Reasons for the narrowing pricing gap

      The cost of insuring CoreWeave's debt against default for five years fell to as low as 4.52 percentage points earlier this month, a drop from a high of 8.81 percentage points in December 2025, marking a 49% reduction in credit default swap spreads. This decrease illustrates a change in how credit markets perceive the company's risk.

      The latest from the EU tech scene, tales from our seasoned founder Boris, and some dubious AI art. It's available for free every week in your inbox. Subscribe now! In November, the pricing difference between Applied Digital’s bonds tied to CoreWeave and Cipher Digital’s bonds linked to Alphabet was nearly 2.9 percentage points. The recent deal is now less than 1 percentage point above Cipher’s recent bond sale associated with Amazon, indicating that the market perceives CoreWeave's credit risk to be nearing that of hyperscaler-backed projects.

      What has changed for CoreWeave

      Since the peak of its credit spreads in December, CoreWeave has secured several major contracts. Meta has pledged $21 billion for AI cloud services through 2032, increasing its total contracted spending with the company to $35 billion. Additionally, Nvidia invested another $2 billion in CoreWeave in January 2026 at a share price of $87.20, broadening their partnership aimed at developing over five gigawatts of AI infrastructure by 2030.

      The company experienced a 168% revenue increase in 2025, totaling $5.13 billion, with management forecasting over $12 billion for 2026. Its contracted backlog now surpasses $66 billion. Co-founder and chief development officer Brannin McBee stated, “We’ve demonstrated our ability to transform diverse customer demand into infrastructure deployment and long-term revenue.”

      The growing wave of AI debt

      Data center developers have amassed over $8 billion from high-yield bond issuances for projects leased to CoreWeave alone, according to Bloomberg data. Reportedly, across the entire AI infrastructure sector, issuers have raised about $30 billion in the high-yield bond market this year.

      The overarching trend is clear. AI infrastructure borrowers, ranging from Cipher Digital to Mistral to Edged Compute, are increasingly utilizing junk bond markets, and the falling yields suggest that credit investors are becoming more confident in this asset class.

      From cryptocurrency mining to cloud computing

      Founded in 2017 as Atlantic Crypto, CoreWeave began as an Ethereum mining operation run by three commodities traders from New Jersey. Following the 2018 cryptocurrency crash, which diminished mining profits, the founders shifted their GPU resources to cloud computing, initially for visual effects and animation, and later for AI workloads as demand escalated in 2022.

      Today, the company operates nearly 50 data centers throughout North America and Europe, leasing Nvidia GPUs hourly to Microsoft, OpenAI, Meta, and Anthropic. It went public in March 2025, raising $1.5 billion in the largest AI-related fundraising to date.

      The risks involved

      CoreWeave's total debt is approximately $30 billion, about three times its level from a year ago. The company still holds a speculative grade, and its credit improvement is in relation to its own December peak, rather than investment-grade standards.

      Applied Digital's overall lease commitment with CoreWeave at Polaris Forge 1 totals 400 megawatts, with expected contracted revenue of $11 billion over the lease terms. This concentration poses a single-tenant risk: if CoreWeave's financial status worsens, the revenue supporting these bonds would be adversely impacted. Whether the $30 billion in AI data center junk bonds issued this year constitutes sound infrastructure financing or suggests an emerging credit cycle remains uncertain.