Two credit signals this week point to tightening funding for risky borrowers. Elon Musk said on X that lenders have largely stopped financing companies without substantial revenue outside AI data centers, and that over 200 specialist AI cloud providers, called neoclouds, face failure or consolidation. “Some will make it through, but not many,” he wrote. SpaceX, he said, secured $40 billion in debt for GPUs, helped by its investment-grade status and revenue from Starlink and rockets. Gartner forecasts that more than 80% of specialist cloud providers will stop operating independently by 2030.
At the same time, the effective yield on US bonds rated CCC or lower reached 17.99% on October 22, according to Crypto Insiders, which cites the ICE BofA index from FRED. It was 14.93% on September 1, and the premium over Treasuries rose from 10.49 to 13.4 percentage points. The Kobeissi Letter calls it the highest level since the 2020 pandemic, up about 500 basis points in six months.
Marketplace reports that rising Treasury yields push up borrowing costs for the riskiest companies, and that those unable to refinance may fail. It names retailers such as PetSmart, Michaels and Guitar Center in the CCC category.
For crypto, the link is indirect. Crypto Insiders says the data signals falling risk appetite and may coincide with pressure on risky assets, but it establishes no link to bitcoin or crypto demand. This is news, not investment advice.
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Sources:
- Cointelegraph: Musk warns over 200 AI neoclouds face guppy-level death
- Crypto Insiders: Rente op riskantste Amerikaanse bedrijfsobligaties stijgt naar bijna 18 procent
- Marketplace: Rising rates make risky corporate bonds even riskier
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