CoreWeave $CRWV ( ▲ 22.99% ) fell sharply this morning after unveiling plans to raise 2 billion dollars through a private sale of convertible senior notes due in 2031. The company also included an option to upsize the offering to 2.3 billion dollars. Part of the proceeds will fund capped call transactions that limit dilution if the stock climbs and noteholders convert. The rest will go toward general corporate needs.
The credit market reaction was not exactly forgiving. CoreWeave’s existing notes due in 2030 and 2031, which carry coupons of 9.25 percent and 9 percent, already faced heavy selling pressure from early October through late November. Although much of the AI credit stress narrative has centered on Oracle $ORCL ( ▲ 7.58% ) , CoreWeave has not escaped investor skepticism.
Some fixed-income investors also view the company as a riskier tenant. Applied Digital recently had to offer a higher coupon on its bonds compared to Terawulf and Cipher, partly because those companies have Alphabet backing them, while Applied Digital depends on CoreWeave as its anchor customer.
Just a month ago, CoreWeave expanded its revolving credit facility to 2.5 billion dollars from 1.5 billion dollars to add flexibility and support its rapid growth plans.