CoreWeave borrowed $2.6 billion for five years against contracts averaging three, one point dearer than May
In August CoreWeave borrowed $2.6 billion for five years against customer contracts averaging three, at a full point more than May's matched-contract loan. Next week's report shows whether 25% price hikes can outrun a $51.6 billion debt stack.
Vincent Jiang · 3 min read
Two loans, one point apart
CoreWeave−3.35% — CoreWeave, down 3.35 percent today, the New Jersey neocloud that rents Nvidia+1.50% — Nvidia, up 1.50 percent today GPU capacity to Microsoft+0.37% — Microsoft, up 0.37 percent today, Meta−0.79% — Meta, down 0.79 percent today and Anthropic$350B — Anthropic, private, latest valuation $350B, reports third-quarter results early next week, expected Monday, November 9 1. The argument over the stock now runs through two loan documents.
In August the company closed DDTL 5.5, a $2.6 billion facility with an approximate five-year maturity whose underlying customer contracts average about three years, priced at SOFR plus 5.50% and rated Ba2 by Moody's+2.78% — Moody's, up 2.78 percent today and BB+ by Fitch 2. In May, the $3.1 billion DDTL 5.0 facility priced at SOFR plus 4.50%, backed by contracts that ran the full length of the loan 3. The extra point is the lenders' price for renewal risk, the cost of re-renting GPUs for the two years nobody has rented yet.
One point times a $51.6 billion stack
Total debt including leases reached $51.6 billion on June 30, $16.5 billion of it leases 4. A full point of spread on that stack is roughly $516 million a year, more than double the $200 million to $260 million of adjusted operating income management guided for the third quarter 45.
Interest expense has run $267 million, then $536 million, then $640 million over the past three quarters, and is guided to $860 million to $940 million this quarter 5. The 9.625% notes due 2032 traded close to 15% yields in October, the level The Inference flagged last month as the expensive end of AI debt's two prices (/article/ai-debt-now-has-two-prices-15-for-coreweave-6-25-for-iron-mountain) 4.
Interest is guided to 3.4 times last year's level, against a $260M profit ceiling
- Interest expense, net
- Estimate
Data
| Interest expense, net | |
|---|---|
| Q2 '25 | $267M |
| Q1 '26 | $536M |
| Q2 '26 | $640M |
| Q3 '26 guide (estimate) | $900M ($860–940M) |
The rents rose, the contracts did not
Atreides Management's Gavin Baker said GPU rents have "gone up every day" in October 4. CoreWeave mostly cannot cash in: committed contracts were 98% of second-quarter revenue, the size-weighted average contract runs about five years, and CFO Nitin Agrawal called the capacity coming up for renewal "a very limited part of our fleet" 34.
Cost of revenue took 34.1% of second-quarter revenue, up from 25.8% a year earlier 3. Consensus now sees a $1.97 loss per share in 2027, a swing from the $2.23 profit expected a year ago 4. The Inference's October reporting put the funding gap at $23 billion by Goldman Sachs'+1.90% — Goldman Sachs, up 1.90 percent today count, $76 billion by Bernstein's (/article/coreweave-s-funding-gap-goldman-sachs-says-23-billion-bernstein-says-76-billion-bonds-yield-16) 4.
The bull case lives in the same pages
JPMorgan's Samik Chatterjee upgraded the stock to Overweight on September 24 with a $125 target: short-term compute at rivals sells for nearly three times CoreWeave's long-term rates, the July price rises of about 25% and the 5 to 10 points of added contribution margin on new contracts show pricing power, and pricing gains "will overwhelm the increase in debt" 1. Twenty-eight of 40 tracked analysts rate the stock a buy 1.
D.A. Davidson's Gil Luria calls CoreWeave a bad apple, not the whole orchard 6. Redburn's Alexander Haissl disagrees, arguing credit markets are "beginning to price risks that equities largely ignore", and rates the stock Sell at $54 1. The shares closed at $54.87 on October 30 4. Inside the 10-Q, the same borrower carries eleven effective rates, and they run from 2% to 15% 3.
One borrower, eleven prices for money: CoreWeave's effective rates run 2% to 15%
Data
| Value | |
|---|---|
| DDTL 1.0 | 15% |
| Magnetar loan | 12% |
| OEM financing | 11% |
| DDTL 2.0 | 11% |
| 2030 notes | 10% |
| 2032 9.625% notes | 10% |
| DDTL 5.0 | 9% |
| DDTL 4.0 | 7% |
| Revolver | 7% |
| 2031 converts | 2% |
| 2032 converts | 2% |
What the print settles
Three numbers decide the next leg. Whether interest lands inside the $860 million to $940 million guide 5. Whether adjusted operating income reaches the $200 million to $260 million guide and margins push toward the low teens in the fourth quarter 5.
And whether any renewal or re-lease comes in at today's prices, the option DDTL 5.5 requires CoreWeave to arrange when the three-year contracts roll 2. Watch the spread on the next facility too. Nebius−2.38% — Nebius, down 2.38 percent today, whose second-quarter deals carried prepayments covering 50% to 60% of the related capex, borrowed $3.5 billion 12 points cheaper last month (/article/nebius-borrows-3-5-billion-12-points-cheaper-than-coreweave-whose-bonds-yield-15) 4, and Nvidia's $2 billion stake bought at $87.20 a share 4 is the backstop nobody can price. Five-year money on three-year contracts is the new trade in AI debt, and the spread on it is the scoreboard.
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