AI default insurance costs hit record as data centre debt worries grow

The cost of insuring against US tech defaults has hit record levels, signaling growing credit stress in the AI trade, particularly for data centres reliant on future revenue. Rising investor concern centers on whether massive AI investments will translate into profits quickly enough for heavily indebted companies to service mounting interest costs. Oracle's credit default swap spread now costs $2.88 to insure $100 worth of bonds. CoreWeave, a loss-making data-centre operator owing nearly $50 billion, is at the center of the turmoil. Its 2032 debt trades at 77 cents on the dollar, and shares fell 15% on Wednesday plus 6% after market.