On Thursday, CoreWeave launched an unprecedented leveraged loan transaction secured by chip customer contracts with companies like OpenAI, carving out new territory in the lending boom financing artificial intelligence infrastructure.
Although this $3.1 billion financing is CoreWeave’s fifth so-called GPU financing—named after the graphics processing units used to repay loans—previous transactions were conducted privately and open only to a limited number of investors. This round, led by Morgan Stanley and MUFG Financial Group, will employ a broad syndicated loan structure, significantly expanding the pool of potential investors and enabling the transaction to proceed.
This loan further fuels the lending boom among tech companies, including CoreWeave, which have raised tens of billions of dollars across various debt markets—from junk bonds to project financing—to build new data centers driving artificial intelligence. Meanwhile, Meta Platforms Inc. plans to issue up to $25 billion in new investment-grade bonds, becoming the latest so-called hyperscale data center operator to issue massive debt to fund the AI boom.
As more facilities come online, they require supporting chips to power operations, and GPU loans are expected to account for an increasingly larger share of total debt. These loans are typically secured by two factors: first, customer contracts for chip usage, which generate cash flows used to pay interest and gradually repay the debt; and second, the intrinsic value of the chips themselves.
The rating for GPU loans typically reflects the creditworthiness of the borrower—in this case, OpenAI and AI developer Cohere Inc., both of which are considered more speculative.
Strong demand
According to people familiar with the matter, the offering launched on Thursday and has already received approximately $6 billion in orders, indicating strong market demand. These individuals requested anonymity due to the sensitivity of the information. The funds raised will be used to purchase and install GPUs that will be deployed at OpenAI and Cohere, both of which have signed contracts to use the technology.
Read more: The $3 trillion build-out of artificial intelligence is triggering a surge in debt and introducing new risks.
Representatives from CoreWeave and Morgan Stanley declined to comment. A representative from MUFG did not respond to requests for comment.
Headquartered in Livingston, New Jersey, CoreWeave has significantly expanded its borrowing in recent years, including through private GPU loans, to fund its high-end AI processor leasing deals. Its most recent financing of $8.5 billion is the largest chip-backed transaction to date, completed in March this year and awarded an investment-grade credit rating, reflecting support from customer contracts backed by blue-chip company Meta.
OpenAI and Cohere are currently unrated, and the new debt is expected to be rated BB, the highest level of junk grade. Fitch Ratings has assigned CoreWeave a BB+ rating, just one level below investment grade, reflecting its "solid business model and stable, recurring revenue."
Pricing for the new loan is under discussion at 99 cents per dollar, representing a spread of 5 percentage points above the secured overnight financing rate, yielding close to 9%. This exceeds the previous investment-grade GPU loans guaranteed by Meta, which yielded approximately 6% with a spread of 2.25 percentage points above the benchmark rate, reflecting differing risk profiles among clients.
Banks made a huge profit
This loan will be issued through its subsidiary, CoreWeave Financing DDTL V, LLC, with a term of 5.5 years—consistent with the expected depreciation cycle of GPUs and representing a typical term. The loan is a delayed-draw term loan, allowing the company to draw the full amount over a specified period. The loan is expected to be fully repaid within the term.
The commitment for the new loan expires on Wednesday, and pricing is expected to be determined shortly thereafter, giving the company several days to market the transaction to potential debt investors.
The debt boom in the field of artificial intelligence presents significant opportunities for the banking sector. Morgan Stanley led a series of data center-related transactions, including arranging over $27 billion in debt financing last year to help Meta build the Hyperion data center in Louisiana. Meanwhile, MUFG and Morgan Stanley jointly led an $8.5 billion loan facility for CoreWeave. Additionally, MUFG participated in several large-scale project financing deals, such as a $38 billion loan package and an $18 billion loan to support data center construction targeting Oracle as a tenant.