From Startup Fortune · · 1m 10s
CoreWeave Default Odds Hit 60 Percent
CoreWeave's credit default swap spread hits 1,000 basis points, pricing a 60% chance of default within five years.
In brief
CoreWeave's credit default swap spread hits 1,000 basis points, pricing a 60% chance of default within five years. CoreWeave's five-year credit default swap spread now exceeds 1,000 basis points, indicating a 60% probability of default within five years. Originally reported by Startup Fortune.
Credit Default Swap Spread
CoreWeave's five-year credit-default-swap spread blew past 1,000 basis points on Wednesday.
Default Probability Calculation
Traders price a 60% chance of default within five years using the spread.
Spread Acceleration
Spreads doubled in nine days from 368 basis points to 1,118 basis points.
Market Reaction
CoreWeave shares and bonds slid as yields on five-year notes climbed toward 15% to 16%.
Credit Swap Mechanics
At 1,000 basis points, insurance costs over $1 million to protect $10 million of exposure.
CoreWeave's Debt Situation
Total debt stood at $35 billion at end of June, up from $21 billion at start of year.
CEO's Counterargument
CEO Michael Intrator claims no major debt maturities until 2028 and strong revenue backlog.
Broader Market Impact
JPMorgan and Mitsubishi UFJ face similar risks with Oracle-linked data center loans.
At a glance
CoreWeave's five-year credit default swap spread now exceeds 1,000 basis points, indicating a 60% probability of default within five years.
