CoreWeave plunges over 5%! $35 million share issuance plus $3 billion convertible bond offering fuels continued cash-burning AI arms race.

CoreWeave plunges over 5%! $35 million share issuance plus $3 billion convertible bond offering fuels continued cash-burning AI arms race.

CoreWeave's latest round of financing reflects the ever-growing thirst for capital behind the AI computing power arms race.

The AI cloud computing service provider announced on Thursday that it plans to issue $3 billion in senior convertible bonds, while also launching an offer-to-market (ATM) program to sell up to 35 million shares.

According to Bloomberg, citing sources familiar with the matter, the convertible bond coupon rate is between 2.375% and 2.875%, and pricing is expected on Thursday evening.

CoreWeave's stock price subsequently came under pressure, falling more than 5% during Thursday's trading session as of press time.

Transaction Structure: Convertible bonds with plans for immediate issuance

According to an announcement released by CoreWeave on Thursday, the convertible bonds will have a term until 2033, and the proceeds will be used for general corporate purposes, with a portion allocated to a series of derivative agreements related to the issuance.

The issuer also has a $500 million over-allotment option, which, if fully exercised, would raise $3.5 billion.

At the same time, the company announced the launch of an on-demand offering program, allowing it to sell up to 35 million shares at any time. The company stated that this program will provide flexibility in financing and help improve its credit profile.

According to sources familiar with the matter, Morgan Stanley, Goldman Sachs, JPMorgan Chase, and Wells Fargo are the underwriters for this convertible bond issuance.

AI-driven financing fever fuels record-breaking US convertible bond issuance.

This round of financing is a microcosm of the next wave of intensive financing activities in the AI infrastructure construction boom.

According to Bloomberg data, companies have borrowed approximately $419 billion in the global debt market this year alone for AI-related fields, leading to an increase in some financing costs due to cooling demand, and investors' willingness to invest has also begun to show signs of fatigue.

In July of this year, CoreWeave was forced to raise its interest rate spread to attract investors when it completed a $2.6 billion leveraged loan.

Despite this, the enthusiasm for AI-related financing has pushed the US convertible bond market to record highs. US listed companies have raised a total of $137.3 billion through convertible bonds this year, setting a new annual record.

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