From AI companies financing data center projects to France's heavily indebted government, credit markets are flashing warnings as investors grow warier of borrowing risks.
Five-year credit default swap spreads have widened for CoreWeave, Oracle and SoftBank Group, as well as France and Italy, according to CNBC's analysis of FactSet data.
AI-related bonds have been selling off as markets raise the cost of capital amid concerns of a financing crunch. Neocloud demand is "off the charts," Nvidia CEO Jensen Huang told CNBC on Thursday, but he warned of a "scarcity of capital." "The demand of the capital is much greater than the availability of the capital," he said, adding, "that's going to get solved."
Countries like France face a similar crunch. Pressure is building in bond markets as investors demand more compensation to finance public debt. Recent mass protests and rioting in France have heightened the market's concerns.
"Markets may no longer want to underwrite massive capex, heavy leverage, and uncertain future cash flows, and that same shift is widening French sovereign spreads as investors demand more compensation to hold long‑duration, debt‑financed obligations from a strained state," FedWatch Advisors CIO and founder Ben Emons wrote on his "French Neoclouds" Substack post.