bonds

According to the Financial Times, investor confidence in whether the artificial intelligence boom can generate enough revenue to support the massive debts of data centers is weakening, leading to a significant drop in the financing bond prices of some large data center projects in the United States. Some bonds that provide funding for data center construction for companies like Meta, Nvidia, and Oracle have fallen below par value. For example, the bonds of CoreWeave, a cloud computing infrastructure provider invested in by Nvidia, have dropped to below 80 cents on the dollar, reaching levels typically considered distressed bonds, with yields nearing 15% on Thursday. The company's stock price fell 17% this week, while competitor Nebius dropped 18%, and Nvidia's market value evaporated by about $270 billion over the past week.Ludovic Subran, Chief Investment Officer of Allianz Group, stated that data center bonds are entering a "Darwinian moment," where projects with weaker credit quality will face survival challenges. He noted that power supply issues and construction delays have led to widening credit spreads, reflecting that the market had previously been overly optimistic in pricing the execution risks of data center debt. The core concern in the market is the significant gap between the scale of AI infrastructure investment and future revenues. OpenAI has postponed its IPO until next year, and Anthropic's quarterly sales growth has slowed, exacerbating doubts about the sustainability of growth in the AI industry.Research firm Gartner predicts that by 2030, 80% of new cloud service providers may not be able to continue operating independently. It estimates that AI data center owners will need to achieve $8.5 trillion in revenue by the end of 2030 to cover capital and financing costs and achieve reasonable returns, but consumer and enterprise spending on AI services is expected to reach only $3.6 trillion at most, indicating that over $4 trillion in assets may face impairment risks by 2032. In some areas of the United States, restrictions have been tightened due to issues related to water usage, noise, and air pollution from data centers, and delays in power supply approvals have further hindered project progress. Investors remain cautious about the circular financing model where clients and suppliers within the industry finance each other. Nvidia CEO Jensen Huang stated on Thursday that he believes CoreWeave does not need Nvidia to provide backstop support and mentioned that the company's capital costs are decreasing and operational strength is continuously improving.

U.S. Democratic Senator Mark Kelly accused Trump of purchasing $5 million in SpaceX bonds and announced a significant space policy change affecting SpaceX two days later, questioning the corrupt nature of his actions.

U.S. Treasury yields collectively declined, with long-term yields leading the drop. Market data shows that the yield on the U.S. 20-year Treasury bond is 5.434%, down 14.6 basis points for the day; the 30-year Treasury bond yield is 5.385%, down 14.1 basis points for the day; the 10-year Treasury bond yield is 5.054%, down 13.6 basis points for the day. The U.S. 7-year Treasury bond yield fell 13.5 basis points for the day, and the 5-year Treasury bond yield dropped 11.5 basis points.

Panic selling in the stock market drives funds to buy government bonds for safety. The yield on the 10-year U.S. Treasury bond fell by 10 basis points to 5.089%. The yield on the 10-year German government bond fell by 8.5 basis points to 3.3819%. The yield on the 10-year French government bond fell by 11.5 basis points to 4.7619%. The yield on the 10-year Italian government bond fell by 10 basis points to 4.4657%.Strategists at TD Securities stated that the sharp decline in the AI sector has lowered market expectations for economic growth, making bonds a hedging tool.

The governance voting results of the Ethereum liquid staking protocol Rocket Pool show that voters support rETH withdrawals and have decided to retain the 4 ETH bond setup while choosing to adopt a random megapool exit mechanism.Voters also postponed proposals related to on-chain governance expansion. The complete Saturn 2 upgrade plan still requires formal approval before it can take effect.

According to BBX data, yesterday global US and Japanese stock-listed companies announced their latest financial updates regarding the increase in digital asset treasury holdings, capital tool operations, and optimization of collateralized lending. The core updates are as follows:Strive (NASDAQ: $ASST) increased its holdings by 3,311 BTC last week, bringing the total holdings to 32,773 BTC: The US-listed company Strive disclosed its latest treasury updates, revealing that it made a significant purchase of 3,311 Bitcoins in the open market last week. As of now, Strive's cumulative Bitcoin holdings have officially reached 32,773 BTC. During the same period, warrants valued at $208 million have been exercised, with approximately 15.3 million warrants set to expire on October 14 at 05:00.Metaplanet (TSE: 3350) plans to issue 52 billion yen zero-coupon convertible bonds to enhance the flexibility of pledged BTC for increased holdings: According to Metaplanet's CEO Simon Gerovich, the company announced it will issue zero-coupon yen convertible bonds worth 52 billion yen (approximately $328 million) maturing in 2031, while simultaneously advancing its share buyback plan.

According to Metaplanet CEO Simon Gerovich, Metaplanet announced the issuance of 52 billion yen zero-coupon convertible bonds maturing in 2031, while simultaneously advancing a share buyback.Of the raised funds, up to 28.3 billion yen will be used for discounted repurchase of company shares; 23.6 billion yen will be used to repay loans and release Bitcoin previously locked as collateral, in order to eliminate interest costs and enhance financial flexibility for additional Bitcoin purchases. In addition, Simon Gerovich will lend up to 55 million shares of personal holdings at an annual interest rate of 0.75% to reduce the hedging borrowing costs for institutional investors and optimize the bond issuance conditions.

Nasdaq-listed company Cipher Digital plans to raise funds for its Barber Lake project and high-performance computing (HPC) data center business expansion by issuing $850 million in zero-coupon convertible bonds.Cipher Digital stated that the private placement could be expanded to a maximum of $1 billion if the initial purchasers exercise their option to purchase additional bonds, which would add $150 million in bonds.At the same time, the company plans to convert part of its 1.75% convertible bonds maturing in 2030 into common stock. The company has previously adjusted the planning of its Barber Lake data center project located in Colorado City, Texas, and signed an agreement with Fluidstack and an undisclosed AI laboratory to extend the project contract term from 10 years to 20 years, with expected contract revenue increasing from $3.8 billion to over $9 billion.

The Bank of America Global Fund Manager Survey shows that investors believe the yield on the 10-year U.S. Treasury bond reaching 5.9% will prompt a shift in asset allocation from stocks to bonds.

The Japanese-listed Bitcoin treasury company Metaplanet announced plans to issue zero-coupon convertible bonds in European yen, totaling approximately $333 million (52 billion yen), maturing in 2031, marking the company's first issuance of such bonds. Merrill International will act as the exclusive bookrunner, with an issuance price of 102.5% of face value. The bonds will be listed on the Singapore Exchange, with net proceeds of approximately $333 million (51.9 billion yen).Of this amount, approximately $151 million (23.6 billion yen) will be used to repay credit financing secured by Bitcoin, and up to approximately $181 million (28.3 billion yen) will be used for stock repurchases. These funds will not be used to purchase Bitcoin. As of September 30, the company holds 44,000 Bitcoins, with a credit financing borrowing balance of approximately $650 million, accounting for about 17.7% of the net asset value of Bitcoin, exceeding the company's set target cap of 10%. The company plans to repurchase up to approximately $162 million (25.3 billion yen) in stock through ToSTNeT-3 on October 14, and establish a total repurchase limit of approximately $385 million (60 billion yen).

Bank of America strategists warn that the debt financing boom for AI infrastructure is driving up borrowing costs for developing countries. In the second half of this year, the average yield on emerging market dollar bonds has surged by nearly 1 percentage point. Amazon and Google's parent company Alphabet Inc. have issued about $70 billion in debt, while the international bond issuance by emerging market sovereign borrowers has halved to $45 billion.

Federal Reserve Governor Waller stated that the safety premium of U.S. Treasury bonds no longer exists.

According to Bloomberg, Tencent Holdings has begun marketing dollar and offshore renminbi bonds, with an issuance scale of approximately 5 billion dollars, and the funds will be used to support its artificial intelligence investments.According to informed sources, the preliminary price guidance for the proposed 10-year and 20-year dollar bonds is approximately 115 basis points and 140 basis points above comparable U.S. Treasury yields, respectively. The guidance for the concurrently marketed 10-year and 30-year offshore renminbi notes is approximately 2.9% and 3.5%, respectively.

According to CoinDesk, data from Swiss Re shows that natural disasters caused $220 billion in economic losses last year, with insurance covering only $107 billion, while the rest was borne by households, businesses, and governments. Catastrophe bonds allow insurance companies to transfer the financial risks of hurricanes, wildfires, or earthquakes to capital market investors. According to an Artemis report, as of June this year, the outstanding size of the catastrophe bond market reached $65.6 billion, with new issuances in the second quarter amounting to $11.3 billion, setting a record high for a single quarter.Bermuda-based law firm Harneys, which focuses on global insurance business, plans to issue tokenized catastrophe bonds in early next year in collaboration with the tokenization platform dropRWA, with each token representing legal ownership of the catastrophe bonds. This scheme is built on the traditional market, where catastrophe bonds were primarily aimed at specialized funds and large institutions, with many products having a minimum investment amount of $250,000 or more. Both parties are considering structures that can accommodate smaller beneficiary interests, but they still need to comply with securities, insurance, and investor protection regulations.Henry Tucker from Harneys stated that the tokenized structure will not turn disaster coverage into arbitrary retail investments, and the funds will be entirely used to cover specific insurance risks. He pointed out that risks such as flooding and typhoon coverage in Southeast Asia are difficult to insure through traditional reinsurance companies, and specialized underwriters can use the tokenized structure to raise funds for single, specific risks. The World Bank arranged $200 million in hurricane coverage for Jamaica in May.

According to Bloomberg, sources revealed that Tencent Holdings is considering issuing offshore bonds to raise $5 billion to meet the funding needs arising from the expansion of its artificial intelligence business.The sources stated that the bond issuance may be denominated in US dollars and offshore renminbi, and could take place as early as this month. As the discussions are not yet public, the sources requested anonymity.

U.S. Treasury and Eurozone government bond yields continue to rise, with U.S. borrowing costs nearing decades-high levels. French government bonds are underperforming compared to other Eurozone countries, as investors express concerns about whether France can reduce its fiscal deficit to 5% of GDP by 2027.MainSky Asset Management Chairman Schulte pointed out that French debt is growing at an annual rate of about 8%, and if this continues, the debt-to-GDP ratio could reach 130% by the end of 2027.

Infrastructure Capital Advisors is optimistic about the U.S. 10-year Treasury bond, expecting the Federal Reserve will only raise interest rates once more. The agency's CEO pointed out that a single rate hike aligns with the Federal Reserve's "dot plot," which is less than market expectations. It is anticipated that the yield on the U.S. 10-year Treasury bond will stabilize around 5%.

Bank of America Chief Strategist Savita Subramanian stated that bonds have become a competitive alternative asset to stocks for the first time. She pointed out that the yield on the U.S. 10-year Treasury has exceeded 5%, while the S&P 500 index's annualized return over the next 10 years may not reach this level.Subramanian believes that the bond allocation environment is more favorable, and U.S. Treasury yields are unlikely to sustain levels above 6% to 7%.

The UK government has appointed Barclays, HSBC, Lloyds, Morgan Stanley, NatWest, and RBC Capital Markets as the joint lead managers for the first digital native government bond, the Digital Gilt Instrument (DIGIT), expected to be issued in the first quarter of 2027. The six banks will provide underwriting, investor communication, and distribution services.DIGIT will be issued through a platform within the UK's digital securities sandbox and will test the application of distributed ledger technology in government bond issuance and its entire lifecycle, including on-chain settlement. Lucy Rigby, the UK's Economic Secretary to the Treasury, stated that the project aims to explore the application of distributed ledger technology in the sovereign debt market and to promote the development of the UK's digital financial infrastructure. HSBC was appointed as the distributed ledger technology provider for the pilot in February and reached an agreement with the London Stock Exchange Group in July to develop a digital securities depository connection solution.