AI capex funding trade imploding? From the D2 desk. @Second_Lane is offering OpenAI equity in 20M+ blocks. That is how a trillion++ private valuation discovers a clearing price. @JensenHuang on Thursday: neocloud demand is "off the charts" and "they just need working capital." Every borrower says that right before the lender becomes the equity. CoreWeave CDS has traded above 1,140bp. ELI5 👇 One company sells the shovels. Its customers borrowed to buy them and some now pay ~15.7% on the money. So the shovel company co-signed up to $100 billion of residual-value guarantees, bought ~$99bn of their equity, and committed to ~$279bn of supply. Customers got marked down. The shovel company's options still price a normal quarter. 🤔 1. PRICED. Neocloud credit CoreWeave 2031s around 80 cents, ~15.7% yield. Market-implied default odds inside a year sit in the high single digits. ~$51.6bn of debt and leases, heavy maturities 2030–2032, cash flow still far short of the stack. 2. PRICED. Oracle 2036s ~320+ bp over Treasuries. S&P cut to BBB- in July (one notch from junk) against a massive backlog. Free cash flow deeply negative last quarter. 3. PRICED. Supply Amazon, Alphabet, Meta and Oracle have issued tens of billions of IG bonds this year, a double-digit share of the overall IG market. The IG complex is functioning as a GPU layaway plan. 4. PRICED. SPV and private credit Meta's Hyperion bond (off-balance-sheet) has traded down to the low 90s from above 110. Blue Owl has capped redemptions after large withdrawal requests. In DeFi that is a withdrawal queue; in private credit it is called a liquidity feature cc @matt_levine. 5. PRICED. Big-tech equity Alphabet well off its highs after a negative free-cash-flow quarter. Meta sold off on elevated capex and negative cash flow. SoftBank (material OpenAI holder) CDS above 400bp. 6. NOT PRICED. NVDA's hidden book 👀 The 10-Q shows a $100B residual-value guarantee cap on the SB Energy / OpenAI Ohio campus, capacity-purchase commitments on unsold neocloud inventory, ~$99bn of equity in customers, and ~$279bn of supply commitments (mostly memory). Options price roughly a 5% move at ~42 vol. One of those two numbers has not read the other. 7. NOT PRICED. Microsoft Microsoft is ~22% of NVDA revenue; NVDA is a dominant share of Microsoft's capex. Any hedges, @satyanadella? 8. NOT PRICED. 2027 spend Street still models Alphabet and Amazon spending materially more in 2027 than this year. Earnings next week will test it. 9. NOT PRICED. Off-balance-sheet treatment. The market is treating Hyperion as Meta risk. Ratings agencies still carry the parent at A+. We will see how long that lasts. 10. NOT PRICED. Policy path post-election. Any "silver bullet" stimulus or industrial policy that keeps the capex train running is not in the likely @realDonaldTrump options in case of a Dem sweep. TL;DR Borrowers have repriced: CoreWeave ~15.7%, Hyperion in the 90s, Alphabet meaningfully off the highs. The lender has not: $NVDA 👀 Key dates: 28 and 29 October guides, 4 November buyback window ends, 19 November NVDA earnings. Texas is watching you, Jensen.
