Nearly 50% Of 2026 Data Center Bonds Are Junk Bonds. Here’s Why.

Shares of CoreWeave, the AI cloud company that rents computing power using Nvidia GPU chips to customers including OpenAI, fell by 25% this week, even after Nvidia’s Jensen Huang publicly supported the firm. The core reasons behind the tumble—heavy debt and rising financing costs—are a big problem that could get much bigger.

Some $4 billion of CoreWeave’s corporate debt is now trading at distressed levels below 80 cents on the dollar. Meanwhile the price of bonds financing several data centers Coreweave has leased have fallen sharply, with their average yield climbing to 11% over the past week—far above the roughly 7% investors are demanding from BB+ bonds, the highest-grade junk bonds.

Lacking strong balance sheets of their own, many so called neoclouds like CoreWeave historically leaned on backstops and customer commitments from tech giants like Nvidia to convince lenders to fund their GPU clusters. At the same time, data center developers relied on those long-term lease commitments from investment-grade hyperscalers to secure cheap debt for physical sites. Powered by bullish equity markets and a rampant need for more computing power, these firms raised $36 billion in data center bonds in 2025, with junk bonds making up only $8.6 billion and the rest being investment grade, according to Barclays.

Now these firms are increasingly turning to high cost, high-yield debt. Of the $80 billion in data center bonds raised so far this year, $37 billion—nearly 50% of the total—are rated junk, or below BBB, more than four times as much as last year. According to a Forbes analysis of FactSet data, these junk bonds are financing 16 data center projects leased to, or backed by, some of the biggest companies driving the AI boom—including Amazon, Meta, Nvidia, Oracle and Jane Street—as well as fast-growing neoclouds such as CoreWeave and Google-backed Fluidstack.

The stakes are enormous. Estimates of the

cost of the U.S. AI and data center buildout