Janus Henderson’s John Lloyd defends CoreWeave bonds as their yield nears 16%

Janus Henderson credit manager John Lloyd is defending his fund’s CoreWeave bonds even as their yield approaches 16%. In an October 20 CNBC interview, he argued that investors have overreacted to the AI cloud provider’s financing pressures—and that borrowing against chips or securing larger customer prepayments could help sustain its data-center buildout.

Lloyd, Janus Henderson’s global head of multi-sector and corporate credit, owns CoreWeave’s 9.75% bonds due in 2031 through the firm’s Multi-Sector Income Fund. His position is not that financing has become painless. He acknowledged higher funding costs but said he saw no major change in the business environment that justified the scale of the selloff.

A steep price for financing doubt

The bonds yielded 15.97% in afternoon trading on October 20, more than 70% above their yield when issued in April. The 9.75% figure is the bond’s coupon, not its current market yield. Bond prices and yields move in opposite directions, so the higher yield reflects the decline in what investors will pay for the debt.

Other market signals remained strained. CoreWeave’s five-year credit-default-swap spread stood at 1,085 basis points, up 14% over the week. CNBC noted that spreads of 1,000 basis points or more generally signal credit distress. Shares had fallen 20% over the past week, despite gaining roughly 2% on Tuesday after touching a 52-week low earlier in the session.

Lloyd linked the pressure to rising Treasury rates, which increase companies’ funding costs and draw attention to borrowers that may need to refinance. He nevertheless said CoreWeave had no near-term debt maturities, separating the challenge of financing further construction from an immediate need to replace maturing debt.

Funding construction beyond the bond market

The sums are substantial. CoreWeave carries roughly $51.6 billion in total debt, including about $35 billion in notes, bonds and loans. Consensus forecasts cited by CNBC put spending on facilities and equipment at $36.4 billion in 2026 and $47.9 billion in 2027. Analysts expect revenue of $26.5 billion next year; those figures remain forecasts, not completed spending or realized sales.

Lloyd outlined three potential sources of support. These are his proposed financing routes, not newly announced commitments from CoreWeave, its lenders or its customers:

• Cash from operations: He expects the business to generate cash next year that can cover some of its construction and equipment spending.
• Chip-backed financing: CoreWeave could borrow more against its graphics processing units—the chips used for AI computing—or rental contracts, he said.
• Customer prepayments: He suggested asking major customers, including Microsoft, Meta and OpenAI, to pay more upfront.

His confidence rests on operating demand

Behind that financing argument is Lloyd’s view that demand for AI computing remains strong. He said adoption was running above consensus expectations while supply bottlenecks persisted. He also described CoreWeave as among the best operators at getting data centers running and said its financial performance had improved throughout the year.

That leaves him expecting a recovery in the bonds, but not a smooth one. His defense rests on CoreWeave’s ability to keep building and find workable funding, rather than on an expectation that market skepticism will vanish immediately.