Artificial intelligence cloud computing infrastructure firm CoreWeave, Inc. (CRWV.US) is planning to raise approximately $8.5 billion from a consortium of banks to fund the expansion of its cloud computing and computational infrastructure for Meta Platforms, Inc. (META.US). Major institutions involved in the financing include Morgan Stanley and Mitsubishi UFJ Financial Group.
The financing is structured as a delayed-draw term loan, with repayment secured by a long-term service contract signed last year between Meta and CoreWeave, which has a maximum value of $14.2 billion. Additionally, an undisclosed supplemental agreement valued at over $5 billion, reached earlier this year, further supports this financing. Sources familiar with the matter requested anonymity due to the confidential nature of the information.
Although CoreWeave's credit rating remains speculative grade, the loan is expected to receive an investment-grade rating, significantly lowering financing costs, due to Meta's "blue-chip" credit quality. The discussed loan pricing is approximately the Secured Overnight Financing Rate (SOFR) plus 2.25 percentage points, resulting in an overall interest rate of around 6% at current levels.
In recent years, CoreWeave has significantly increased leverage and borrowing to lease and deploy high-end AI chips, aiming to keep pace with the explosive growth in AI computing demand. This trend has raised concerns among some investors about industry-wide "debt expansion." According to a recent Moody's report, CoreWeave's adjusted leverage ratio was about 6.9 times as of September 30 last year, and the company is expected to remain cash-flow negative for at least the next 18 months due to high capital expenditure pressures.
Morgan Stanley and Mitsubishi UFJ Financial Group are currently privately distributing the loan to more lenders, with the transaction expected to be completed in March. CoreWeave, Morgan Stanley, and Mitsubishi UFJ Financial Group declined to comment, while Meta did not immediately respond to inquiries.
This financing is part of CoreWeave's diversified funding strategy. The company has previously utilized the delayed-draw loan structure in three other financings, typically collateralized by cash flows from chip leasing contracts and the value of the chip assets themselves. This structure allows companies to draw funds in stages according to project progress, better aligning with long construction cycles.
At an industry level, the total cost of building AI infrastructure is conservatively estimated to exceed $3 trillion, a sum too large for even major cloud service providers to fund entirely from their own cash flows. Data indicates that AI-related companies and projects will raise at least $200 billion through debt markets in 2025, with the actual figure likely higher due to a significant volume of private transactions. Market projections suggest related debt issuance could reach hundreds of billions of dollars in 2026 alone.
As of the end of September last year, CoreWeave's outstanding balance under delayed-draw loan facilities was approximately $8 billion, with total debt around $14 billion. Furthermore, the company issued $2.25 billion in convertible senior notes last December and plans to announce its latest quarterly financial results soon.
This financing effort comes as market attention intensifies regarding the pace of AI investment, the sustainability of capital expenditures, and the highly interconnected capital relationships within the industry. NVIDIA Corporation (NVDA.US), a primary supplier of core chips for AI infrastructure, is also a significant supporter of CoreWeave, highlighting the tight commercial and financial links within the sector.
CoreWeave's stock price surged more than 350% in the months following its IPO last March, but has since retreated nearly 50% from its peak amid a broader pullback in AI-related stocks. Credit rating agencies continue to monitor changes in its capital structure. In a report last December, S&P Global Ratings noted that CoreWeave is rapidly evolving its complex debt capital structure to meet its expanding capital expenditure needs.
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