Credit markets are widening the cost of borrowing for AI infrastructure leaders and the French government as investors demand higher compensation for default risk. Five-year credit default swap spreads have increased for CoreWeave, Oracle, SoftBank Group, France, and Italy, according to CNBC's analysis of FactSet data.
The surge reflects a growing wariness toward heavy leverage and uncertain cash flows in the AI sector. Nvidia CEO Jensen Huang told CNBC on Thursday that neocloud demand is "off the charts" but warned of a "scarcity of capital." He noted that the demand for capital far exceeds its availability, a dynamic he said will eventually be solved.
CoreWeave has seen some of the sharpest increases in default-protection costs. Its five-year CDS spread hit 1,065.84 basis points on Oct. 21, according to FactSet, highlighting concerns about the company's ability to finance its expansion. Oracle's spread rose to 308.25 basis points on Oct. 21. S&P Credit Ratings downgraded Oracle's debt to the lowest level of investment grade in July, citing the credit risks associated with its expanding infrastructure business.
SoftBank Group, which holds a large stake in OpenAI and has committed $87 billion to data centers in France, also faces rising costs. Its five-year CDS spread stood near a four-year high of 432 basis points on Oct. 20, up from 284 basis points on Jan. 5.
Similar pressures are affecting French sovereign debt. France's five-year CDS spread reached 89.8 basis points on Oct. 21, up from 29.74 basis points on Jan. 2. This exceeds Italy's spread of 67.1 basis points on Oct. 22. Germany's spread remained much lower at 12.15 basis points on Oct. 22.
Thierry Wizman, global FX and rates strategist at Macquarie Group, identified France's debt burden and persistent fiscal deficits as key drivers. He noted that French sovereign debt stands at 120% of GDP, whereas German government debt is 65% of GDP.
The spread between French and German bonds has surged to 1.6 percentage points. France's 10-year bond yield topped 5% for the first time since 2002. While these gaps are wide, they remain smaller than the borrowing cost differentials seen during the Eurozone debt crisis of the early 2010s.
France faces another test on Oct. 23 when Moody's reviews its Aa3 sovereign rating, which carries a negative outlook. Political divisions continue to complicate efforts to repair public finances.
S&P Global warned on Oct. 19 that major cloud providers may have more AI-linked debt exposure than publicly recognized. Broader credit pressure is visible in North America's CDX High Yield index, whose five-year midpoint spread reached 355.35 basis points on Oct. 20, up about 39 basis points from the end of 2025.