CoreWeave falls over 5%! 35 million shares issued at market price plus $3 billion convertible bond issuance, AI arms race continues to burn cash

CoreWeave’s renewed fundraising highlights the ever-growing capital demands behind the AI compute power arms race.

The AI cloud computing provider announced on Thursday its plan to issue $3 billion in senior convertible bonds, while also launching an at-the-market (ATM) offering program to sell up to 35 million shares.

According to Bloomberg, citing sources familiar with the matter, the convertible bond coupon range is set at 2.375% to 2.875%, with pricing expected on Thursday night.

CoreWeave shares came under pressure as a result, falling over 5% during Thursday’s session at the time of reporting.

Deal Structure: Convertible Bonds Combined with At-the-Market Program

According to CoreWeave’s announcement on Thursday, the convertible bonds will mature in 2033. The funds raised will be used for general corporate purposes, with a portion allocated to a series of derivative agreements related to the issuance.

The issuer also set a $500 million oversubscription option, which, if fully exercised, would bring total financing to $3.5 billion.

Meanwhile, the company announced the initiation of an at-the-market program, allowing it to sell up to 35 million shares at its discretion. The company stated this would provide financing flexibility and help optimize its credit profile.

Sources noted that Morgan Stanley, Goldman Sachs, JPMorgan, and Wells Fargo acted as underwriters for the convertible bond offering.

AI Fundraising Boom Drives US Convertible Bonds to Historic Highs

This fundraising is a microcosm of a new wave of intensive financing driven by the AI infrastructure boom.

According to Bloomberg data, this year alone, companies have raised about $419 billion in the global debt market for AI-related fields, which has driven up some financing costs as demand cools, and investors’ willingness to deploy capital has started to show signs of fatigue.

In July this year, when CoreWeave closed a $2.6 billion leveraged loan, it was forced to increase the spread to attract investors.

Nevertheless, the enthusiasm for AI-themed fundraising has still 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.