Shares in AI data center group CoreWeave (CRWV) were brighter today as it gets set to secure a new $1.5 billion debt deal.
Gauging Investor Interest
According to a report in the Financial Times, CoreWeave, which recently went public in late March after a highly anticipated IPO, is looking to raise cash to refinance its liabilities.
It is reported that CoreWeave is holding a roadshow this week with bankers at JPMorgan (JPM) for debt deals that are expected to include a high-yield bond offering.
It is understood that CoreWeave will use the meetings this week to gauge investor interest before deciding on the size of the potential deal.
One person quoted by the FT said the move was intended to refinance the company’s debt in the public credit markets at lower rates and thus reduce its cost of borrowing. Another suggested that the deal could be used to invest in its operations.
The FT said that CoreWeave has a debt of around $8 billion secured against its portfolio of over 250,000 Nvidia (NVDA) chips and contracts with blue-chip customers like Microsoft (MSFT).
Doubts Remain
The move follows a fairly disappointing IPO with the company initially aiming for a $2.7 billion raise but ending up at $1.5 billion at $40 a share. That was down to concern over its debts but also weaker demand for AI infrastructure such as data centers.
Since its listing, the CoreWeave share price has performed well rising to around $55. But concerns remain with earlier this week investment firm MoffettNathanson beginning coverage of CoreWeave with a Neutral rating and a $43 price target.
It is concerned that supply and demand for GPUs may eventually balance out with major customers like Microsoft needing fewer outsourced computing services.
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