FULL EPISODE: AI’S DEBT FUELED GROWTH
The AI boom is being financed with debt—and the numbers are staggering. The world’s biggest tech companies are spending hundreds of billions of dollars to build the infrastructure behind artificial intelligence. But while investors focus on the stocks, Brian Carney, Portfolio Manager at Mawer Investment Management, is watching the credit markets—and he sees risks most investors are ignoring.
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CoreWeave — Senior Notes due February 1, 2031 | The high-yield exception that proves the rule
- Yields 9%, purchased at roughly a 5% spread over treasuries — well above the ~3% average bump Carney says the broader high-yield market is offering for similar risk today
- CoreWeave doesn’t deploy capital until contracts are signed with high-quality counterparties (including “the Microsofts of the world”), which removes the overbuilding risk Carney sees elsewhere in AI infrastructure
- Nvidia holds a 10% equity stake and is also a chip supplier — Carney is watching the circular financing angle closely across the hyperscaler complex, but says CoreWeave’s contracted, transparent structure keeps it legible as a lender
- Thesis: credit quality is expected to migrate toward investment grade over time as the contracted revenue base builds out
FMC Corp — 20-Year Senior Notes | A “fallen angel” fertilizer name bought at a deep discount
- Purchased at roughly 60 cents on the dollar, yielding about 8% — a ~3% spread over treasuries, versus the sub-2% bump Carney says most high double-B paper offers today
- FMC was downgraded from investment grade to high yield, but Carney’s downside case still pegs recovery value at 90 cents on the dollar — an asymmetric risk/reward setup
- US farming demand is viewed as durable regardless of tariff policy, and FMC has planned asset dispositions specifically aimed at reducing leverage
- Simple, easy-to-underwrite business model — exactly the kind of “boring” credit story Carney’s strategy is built to find
Continental Resources — Investment Grade Notes | Bought into a rate spike most investors were too nervous to touch
- Purchased when 30-year US Treasury yields briefly broke above 5%, locking in roughly a 2% spread on top of that — for a yield near 7% on an investment-grade oil & gas credit
- Privately held by Harold Hamm, one of the lowest-cost producers in the US, operating in Texas, Montana, and Wyoming
- Strong, consistent cash generation underpins the credit; Carney’s team moved quickly to capture the dislocation before the opportunity closed
- A textbook example of Carney’s broader playbook: build a “war chest” of dry powder, then move fast when markets briefly offer an unusually generous spread
Don’t miss our next episode! All about metals and mining!
DISCLAIMERS: This text AI generated and should be checked against actual delivery. The content provided in this podcast is for informational purposes only and does not constitute financial, investment, or professional advice. The views expressed by the host and guests are their own and do not necessarily reflect the opinions of any organization or company. The host and guests may maintain positions in any securities discussed on the podcast. Always consult with a qualified financial advisor or professional before making any investment decisions.
