Data‑center bonds tumble as debt‑overhang worries hit CoreWeave and Applied Digital
Bond investors pushed yields on CoreWeave’s 2031 and 2032 senior notes above 15% after the company’s large debt load raised service‑ability concerns. Applied Digital’s 7% five‑year senior secured notes fell to a price of 94.5, reflecting a yield of about 8.44% after JPMorgan downgraded its rating to Neutral over a projected supply overhang. The sell‑off was amplified by Cipher Digital’s announcement of a new $850 million zero‑coupon convertible note offering, with an optional $150 million additional tranche.
Why it matters
Higher yields increase borrowing costs for CoreWeave and Applied Digital, tightening financing for their aggressive data‑center expansion plans. The rating downgrade and new convertible issuance signal heightened credit risk, which may affect investors’ exposure to the sector’s debt instruments.
Key facts
- 1CoreWeave’s 9.75% senior 2031 bonds traded at 78 on Oct 14, implying a 16.39% yield. morningstar.com
- 2CoreWeave’s $1.25 billion 9.625% senior 2032 bonds fell to a price of 75, implying a 16.5% yield. morningstar.com
- 3Applied Digital’s $1.59 billion June print of 7% five‑year senior secured notes was priced at 94.5, yielding about 8.44%. finance.yahoo.com
- 4JPMorgan cut Applied Digital’s project‑finance bond rating to Neutral from Overweight, citing a looming supply overhang. finance.yahoo.com
- 5Cipher Digital announced a private offering of $850 million zero‑coupon convertible senior notes due 2032, with an option for buyers to purchase up to an additional $150 million. finance.yahoo.com
- 6Morgan Stanley lowered its price target for Cipher Digital’s stock to $51.50 from $54.00 after the debt raise announcement. morningstar.com
Summary written by AlphAI AI Desk from 2 of 2 sources. Not investment advice. Figures are as stated by the linked sources.