In the third quarter of 2007, insuring $10 million of Lehman Brothers’ debt for a year cost less than $100,000.
A year later, the same protection cost more than $1.4 million, and the bank had filed for bankruptcy, according to figures cited by J.P. Morgan Wealth Management.
Today, buying that insurance on CoreWeave Inc. (NASDAQ:CRWV) costs about $1.15 million a year. As a result, a comparison Wall Street had shelved for almost two decades is back.
CoreWeave’s five-year credit default swaps traded at 1,148 basis points on Monday morning, according to data from S&P Global Market Intelligence shared with Benzinga.
CoreWeave Default Swaps Hit Records
The spread peaked at 1,167 basis points on Oct. 22, the highest level in the 12 months of data provided by S&P Global.
One month ago, the spread stood at 835 basis points. A year ago, it was 421.
S&P Global uses a 40% recovery rate for CoreWeave. On that assumption, current pricing implies a roughly 62% chance of default over five years.
In addition, the gap with the rest of the AI trade is wide.
CoreWeave now pays about 21 times more than Microsoft Corp. (NASDAQ:MSFT) to insure its debt. It also pays 18 times the level of the CDX North American Investment Grade Index, which stood at 63 basis points on Monday.
| Company | Oct. 26 | Sept. 25 |
|---|---|---|
| CoreWeave Inc. (NASDAQ:CRWV) | 1,148 | 835 |
| Oracle Corp. (NYSE:ORCL) | 304 | 236 |
| SpaceX (NASDAQ:SPCX) | 252 | 181 |
| Nvidia Corp. (NASDAQ:NVDA) | 128 | 87 |
| Meta Platforms Inc. (NASDAQ:META) | 121 | 98 |
| Amazon.com Inc. (NASDAQ:AMZN) | 84 | 73 |
| Alphabet Inc. (NASDAQ:GOOGL) | 83 | 73 |
| Microsoft Corp. (NASDAQ:MSFT) | 55 | 52 |
Five-year CDS spreads in basis points. CoreWeave as of 11:42 GMT on Oct. 26. Source: S&P Global Market Intelligence
Some Are Whispering ‘Lehman’
Bill Blain, financial strategist and CEO of Windshift Capital, drew the parallel in his Oct. 16 Morning Porridge newsletter.
“CoreWeave is way out front in the race to be the first major crash of the AI Debt Bubble. All major financial bubbles need that critical ‘wake-up-and-smell-the-money’ (or lack of it) moment. The moment when the market realises it is not in Kansas anymore,” Blain said.
“In 2007 it was the run on Northern Rock as short-term funding dried up, and later the failing Bear CDO funds… from there the crisis developed its own momentum, and soon there was the looming inevitability that a bank like Lehman was going to fail,” he added.
James Foord, an independent market commentator, went a step further in an Oct. 22 Substack post. He called CoreWeave the Lehman of this cycle, “a fair comparison given what its bonds are pricing.”
Foord then cast Nebius Group N.V. (NASDAQ:NBIS) as this cycle’s JPMorgan, the stronger balance sheet that could survive the shakeout and pick up assets.
J.P. Morgan Sees a Targeted Repricing
J.P. Morgan Wealth Management drew a similar parallel in an Oct. 23 note, although it did not name the company.
Global investment strategist Justin Biemann described a financing-dependent AI infrastructure borrower whose five-year CDS jumped to 1,100 basis points that week.
According to Biemann, that pricing implies a near or above 50% probability of default over five years, up from below 30% a year earlier.
“That is not a forecast, but it is difficult to dismiss,” Biemann said.
However, he stressed that the stress is targeted. Investors are demanding roughly 10 times as much to insure the weakest AI borrowers as the strongest, while broad investment-grade protection remains contained.
The concern, Biemann said, is limited to business models that need debt markets to stay open while spending stays high and cash flow stays thin.
Musk Adds to the Pressure
Meanwhile, Elon Musk added fuel on Monday.
In a post on X, he wrote that lenders have all but stopped funding companies without big revenue outside AI data centers. He also predicted “guppy-level death and consolidation” among the more than 200 neoclouds.
CoreWeave shares dropped to $51.24 early in the session, their lowest level since May 2025, before buyers stepped in. By Monday afternoon, the stock was up 3.7% at $56.24.
Even so, the stock remains 60% below its 52-week high of $141.79. Its market value of about $31 billion compares with roughly $51.6 billion of total debt, including leases.
Credit Is Flashing a Warning, Not a Verdict
Still, J.P. Morgan cautioned against reading CDS spreads as a countdown to default.
In 2005, the cost of insuring a major U.S. automaker’s debt surged ahead of its downgrade to junk. However, the company raised cash, restructured and never filed for bankruptcy.
Lehman followed the opposite path. Its five-year CDS climbed above 1,400 basis points by mid-September 2008, as the bank collapsed.
CoreWeave now sits about 250 basis points below that level. As a result, the cushion has grown thin, but the market is pricing a risk, not an outcome.
Which path CoreWeave takes will depend on whether lenders keep funding its buildout long enough for cash flow to catch up with its debt.
Image: Shutterstock
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