Credit markets are signaling higher financing costs and default risk for companies funding AI-related data centers as well as for heavily indebted governments. Five-year credit default swap spreads for CoreWeave, Oracle and SoftBank rose sharply to 1,065.84, 308.25 and 432 basis points, respectively, in mid-October. In France, the five-year sovereign spread climbed to 89.8 basis points, compared with 67.1 for Italy and 12.15 for Germany, while French public debt reached 120% of GDP. The yield on French 10-year bonds topped 5% for the first time since 2002, and the spread with German bonds widened to 1.6 percentage points ahead of Moody’s scheduled review of France’s sovereign rating. The stress is spreading beyond AI financing: the five-year midpoint spread of the North American CDX High Yield index rose by about 39 basis points from the end of 2025.
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