CoreWeave’s borrowing costs just fell from 10% to 7%. The AI data centre debt market is repricing risk in real time.

An Applied Digital subsidiary raised $1.59 billion in the high-yield bond market on Tuesday to fund a fourth building at its Polaris Forge 1 campus in North Dakota, which will provide 150 megawatts of computing capacity for CoreWeave under a 15-year contract.

The bonds were priced to yield 7%, a steep drop from the 10% investors demanded for an earlier portion of the same project in November. The offering attracted five times its size in demand.

Why the pricing gap closed

The cost of protecting CoreWeave’s debt against default for five years fell to as low as 4.52 percentage points earlier this month, down from a peak of 8.81 percentage points in December 2025. That 49% decline in credit default swap spreads reflects a broad shift in how credit markets assess the company’s risk.

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In November, the pricing gap between Applied Digital’s CoreWeave-linked bonds and Cipher Digital’s Alphabet-linked bonds was almost 2.9 percentage points. This week’s deal sits less than 1 percentage point above Cipher’s recent Amazon-tied bond sale, suggesting the market now views CoreWeave’s credit risk as approaching that of hyperscaler-backed projects.

What changed for CoreWeave

CoreWeave has signed several large contracts since its December credit spread peak. Meta committed $21 billion for AI cloud capacity through 2032, bringing total contracted spend with the company to $35 billion. Nvidia invested an additional $2 billion in CoreWeave in January 2026 at $87.20 per share, expanding a partnership aimed at building more than five gigawatts of AI infrastructure by 2030.

The company’s revenue grew 168% in 2025 to $5.13 billion, and management has guided for more than $12 billion in 2026. Its contracted backlog now exceeds $66 billion. “We’ve shown we can turn diverse customer demand into deployed infrastructure and long-term revenue,” said co-founder and chief development officer Brannin McBee.

The broader AI debt wave

Data centre developers have raised more than $8 billion from high-yield bond sales for projects leased to CoreWeave alone, according to Bloomberg data. Across the full AI infrastructure sector, issuers have raised reportedly $30 billion in the high-yield bond market this year.

The broader trend is unmistakable. AI infrastructure borrowers from Cipher Digital to Mistral to Edged Compute are tapping junk bond markets at scale, and declining yields suggest credit investors are becoming more comfortable with the asset class.

From crypto mining to cloud computing

CoreWeave was founded in 2017 as Atlantic Crypto, an ethereum mining operation run by three commodities traders in New Jersey. When the 2018 crypto crash wiped out mining margins, the founders pivoted their GPU inventory into cloud computing, first for visual effects and animation, then for AI workloads as demand surged in 2022.

The company now operates nearly 50 data centres across North America and Europe, leasing Nvidia GPUs by the hour to Microsoft, OpenAI, Meta, and Anthropic. It went public in March 2025, raising $1.5 billion in the largest AI-related listing by amount raised.

The flags

CoreWeave’s total debt load sits at approximately $30 billion, roughly triple what it was a year earlier. The company remains speculative-grade, and its credit improvement is relative to its own December peak, not to investment-grade benchmarks.

Applied Digital’s total lease commitment with CoreWeave at Polaris Forge 1 is 400 megawatts, with an anticipated $11 billion in contracted revenue over the life of the leases. That concentration creates single-tenant risk: if CoreWeave’s financial position deteriorates, the revenue stream underpinning these bonds would be directly affected. Whether $30 billion in AI data centre junk bonds issued this year represents prudent infrastructure financing or a credit cycle in formation remains an open question.