HONG KONG (Realist English). The market selloff is forcing companies behind the global artificial intelligence boom to delay financing plans or pay a higher cost of capital. Investors are beginning to reassess whether companies racing to build AI infrastructure can generate revenues sufficient to cover rapidly rising costs for computing, land, and energy.
Financing conditions have tightened sharply
Over the past week, amid weakening AI stocks and the debt of data centre operator CoreWeave falling to distressed levels, IPO plans for AirTrunk REIT (backed by Blackstone), Firmus (backed by Nvidia), and SB Energy (backed by SoftBank) were either withdrawn or suspended.
CoreWeave’s five-year credit default swaps (CDS) exceeded 1,000 basis points, implying a market-implied probability of default within five years of about 63%, compared with roughly 30% a year earlier. The bonds of this loss-making “neocloud” company, with nearly $50 billion in debt maturing in 2032, are trading at about 78 cents on the dollar with a yield above 16%. The company’s shares fell 15% on Wednesday and another 6.8% in premarket trading on Thursday.
“CoreWeave is rapidly becoming the ‘canary in the coal mine’ for the AI trade,” said Kathleen Brooks, research director at XTB.
Rising rates are the key pressure
The yield on benchmark 10-year US Treasury notes posted its largest quarterly rise in a century last month, forcing investors to more carefully assess whether expected revenues can cover a growing debt burden. Morgan Stanley estimates that AI infrastructure construction will require about $3 trillion by 2028, roughly half of which will be financed through debt or quasi-debt instruments.
Vishal Merani, managing director for digital infrastructure ratings at S&P Global Ratings, noted that as Treasury yields rise, debt-financed projects “will need to meet a higher hurdle rate.”
IPO market hit
Firmus planned to raise $5 billion — which would have been the second-largest listing in Australia — but the company failed to convince investors of the realism of its ambitious revenue forecasts given roughly $30 billion in debt. Nuclear services company Holtec, withdrawing its US IPO, cited a “perfect storm,” the main cause being uncertainty over data centre demand.
Nicholas Tuan of Savills Asia Pacific Consulting noted: “IPOs usually seek ‘hype’ because they are mainly looking for oversubscription. But when you strip away all the layers, there may be no fundamental asset value.”
M&A in Asia still at record levels
Despite the cooling equity market, data centre M&A in Asia may set a record year — as of Tuesday, volume reached $21.3 billion, more than double the $10 billion for all of 2025. Debt financing also remains strong: total syndicated loans and bond issuances reached $22.3 billion.
Stack Infrastructure, owned by Blue Owl, is seeking a five-year loan of A$8.6 billion ($6 billion) for a data centre project in Melbourne — which could be one of the largest financings in the sector in Asia. AirTrunk, despite postponing its REIT IPO, is close to selling its data centre in Johor, Malaysia, at a valuation of about $1 billion.
Market differentiation is intensifying
DBS Group CEO Tan Su Shan said: “The market has spoken. This is not bad, because now people are demanding higher returns and examining structure.” She noted that weaker companies may face credit rating downgrades, but such risk repricing is “healthy.”
Analysts point out that investors are increasingly distinguishing between mature wholesale operators with long-term customer commitments and stable revenues, and high-risk “neoclouds” and “AI park builders.”
What this means
The boom in AI data centre deals is undergoing its first real stress test. Rising rates have exposed a key contradiction: these projects depend on future revenues to service current debt, but when borrowing costs rise, the present value of future revenues falls while the debt burden remains unchanged. CoreWeave’s CDS exceeding 1,000 basis points is a clear signal: the market is repricing the “debt-driven AI growth” model.
In the short term, projects backed by hyperscalers or long-term leases, such as the Meta-backed El Paso project, will still be able to obtain financing.
But independent developers without credit enhancement will face penalty rates of 9% to 14%, which could undermine the operating economics of data centres. The market is shifting from “growth priority” to “quality priority,” and this shift is only just beginning.
