The Canadian Investor · Oct 17, 2026 · 1h · 50m saved
With Simon Belanger, Co-Host of The Canadian Investor · Dan Kent, Co-Host of The Canadian Investor
CoreWeave's bonds were issued at coupons of roughly 9% and now yield 15% to 16%, and Simon Belanger, co-host of The Canadian Investor, cited a report that the market is pricing in a 60% chance the company defaults.
CoreWeave's stock fell about 20% over two trading days, and that drop drew the attention. Simon and his co-host, Dan Kent, said the debt is the bigger story, and an early sign of stress in the AI trade that much of the market now rests on.
"It's hard to make a business model work on 10% plus debt. Like, let's be honest, you need a pretty solid business to be able to make it work on 10% cost of capital." — Simon Belanger
Simon and Dan host the show's Thursday livestream, which works through the week's macro data and company news for Canadian investors. This week they went from CoreWeave's balance sheet through US inflation, Berkshire Hathaway's housing bet and a consumer who is trading down.
The full episode is covered here so you can skip it. 60 minutes of audio, 10 minutes of reading.
Here are the 14 arguments that matter.
Key Takeaways
CoreWeave's bonds have gone from 9% coupons to 15–16% yields, which Simon reads as the market pricing in a 60% default risk
CoreWeave's enterprise value of $81B is more than twice its $35B market cap, and the difference is debt
Simon expects an AI lab, probably Anthropic, to feel the strain before CoreWeave or Oracle does
Samsung and SK Hynix make up about 60% of the KOSPI, so Korea is where Simon would look first for trouble
Berkshire has taken its Lennar stake above 10%, a bet on overbuilt markets in Texas and Florida
Food and restaurant companies cannot pass on higher costs, and price cuts are not winning back volume
Simon sees no version of the AI and credit cycle that ends well, only a question of how long it lasts
1. CoreWeave's Bonds at 15-16%
Simon opened on CoreWeave, the company that buys GPUs and rents the computing power to hyperscalers and AI labs. Its shares fell about 20% over two trading days, but the move in its bonds was larger.
CoreWeave's debt now trades at yields close to double its original coupons
"The bonds that were initially trading at roughly 9% coupon... they're paying like 15, 16% now." — Dan Kent
For a bond's yield to climb that far above its coupon, its price has to fall well below face value. Simon took the next step and put a probability on what the market is saying.
"I saw an article even today that apparently the market is pricing in 60% of default risk for CoreWeave, which is pretty massive." — Simon Belanger
