Huo Xing Finance reports that on July 28, the cost of credit protection against NVIDIA’s potential debt default rose to a record high on Monday, as markets expressed concern that the company’s ongoing negotiations for over $750 billion in AI infrastructure deals could increase its obligations. According to ICE Data Services, NVIDIA’s five-year credit default swap (CDS) spread rose by 14 basis points to 82 basis points per year—the largest single-day increase since active trading of these swaps began in November last year. Last week, NVIDIA stated that its collaboration with SK Hynitz’s parent company, SK Group, exceeds $500 billion. Additionally, NVIDIA is discussing providing up to $250 billion in guarantees for OpenAI’s U.S. data center project and potentially offering $350 billion in financing for OpenAI’s chip purchases. Sal Naro, Chief Investment Officer at Coherence Credit Strategies, noted that the capital expenditures required for AI infrastructure are enormous, and the bond market is facing a significant influx of new supply. Market participants are concerned that opaque financing arrangements, off-balance-sheet transactions, and complex corporate relationships could lead to credit rating downgrades. Such financing typically requires an investment-grade rating, but companies like OpenAI and Anthropic are currently burning through cash at a rapid pace. Guarantees from large corporations can help elevate the credit ratings of AI infrastructure debt; previously, Broadcom provided the majority of credit support for a $35 billion chip financing deal for Anthropic.
NVIDIA's CDS Surges on $7.5T AI Deals as Debt Concerns Grow
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Summary
NVIDIA’s 5-year credit default swap (CDS) increased by 14 basis points to 82 basis points on July 28, marking the largest rise since late 2024. On-chain analysis reveals growing concerns over $7.5 trillion in AI-related deals, including a $5 trillion agreement with SK Group and $3.5 trillion in OpenAI financing. Sal Naro of Coherence Credit Strategies pointed to risks stemming from off-balance-sheet arrangements and opaque funding structures. On-chain data suggests market anxiety over potential credit downgrades.
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