Credit default swaps signal rising stress in AI data centre debt

The cost of insuring against potential US tech defaults has hit record levels, signaling growing credit stress in the AI trade, particularly for data centre operators like CoreWeave that depend on future revenue. Shares in AI-driven companies remain top gainers this year, but many have fallen recently as investors reassess capital costs amid rising interest rates and inflation. Doubts persist over whether billions in infrastructure spending will pay off. Credit default swaps (CDS) are derivatives protecting bond investors against issuer default. The single-name CDS market is worth about $9 trillion, a small slice of global bond markets. Rising spreads can amplify credit concerns, potentially creating a self-reinforcing cycle.