NVIDIA Credit Default Swap Cost Sees Largest Single-Day Surge in History, $750 Billion AI Trade Triggers Debt Concerns

BlockBeats News, July 28th, NVIDIA's Credit Default Swap Cost Hits Record High as Market Expresses Concerns Over $750 Billion AI Infrastructure Deal. ICE Data Services data shows NVIDIA's 5-year credit default swap price spiked 14 basis points to 82 basis points annually, marking the largest one-day increase since the active trading began in November last year.

Last week, NVIDIA stated that its partnership with SK Group's subsidiary SK Hynix exceeds $500 billion. Furthermore, NVIDIA is in talks to provide up to $250 billion in guarantees for OpenAI's U.S. data center project and may offer $350 billion in financing for OpenAI to procure its chips.

Sal Naro, Chief Investment Officer of Coherence Credit Strategies, mentioned that the capital expenditure required for AI infrastructure construction is enormous, leading to a significant increase in bond market supply. Market concerns revolve around opaque financing arrangements, off-balance-sheet transactions, and intercorporate relationships that could result in credit rating downgrades.

Such financing typically requires investment-grade ratings, but companies like OpenAI and Anthropic are still rapidly burning cash. Large corporations providing guarantees can help boost the debt rating of AI infrastructure projects. Previously, Broadcom offered substantial credit support for a $350 billion chip financing deal for Anthropic.