Nvidia's $750B AI deal push spooks its own credit market

The number that jumped out this week is not the deal size, it is the reaction in Nvidia's own credit market. According to Bloomberg, Nvidia is working on a fresh round of AI deals worth more than $750 billion, and the price of insuring its debt against default for five years spiked by the most on record in a single session, rising as much as about 0.14 percentage point to around 0.82 percentage point a year on Monday. Nvidia's credit default swaps have only been actively trading since November, so the move is early-life rather than crisis-era, but it is the first time the bond market has visibly pushed back on the dealmaking.

The pieces stacking up are large. A partnership with the parent of SK Hynix means Nvidia and SK Group will be doing more than $500 billion of business with each other. On top of that, Bloomberg (citing the Wall Street Journal) reports Nvidia is in talks to backstop as much as $250 billion so OpenAI can lease a 10-gigawatt data center that SB Energy, SoftBank's power subsidiary, is building on a decommissioned uranium-enrichment site roughly 50 miles south of Columbus. Full project cost including chips could exceed $500 billion. Separately, Nvidia is discussing financing OpenAI's chip purchases for the site, a deal that could total as much as $350 billion. The reason a backstop is even being negotiated is straightforward: OpenAI does not yet turn a profit and cannot obtain an investment-grade credit rating on its own.

Bloomberg's own phrasing for what worries the debt market is worth repeating verbatim, because it captures the shape of the problem: 'you buy from me, I invest in you, and everything's fine unless one of us has a problem, in which case both of us have a problem.' Vendor financing at this scale means Nvidia's revenue, OpenAI's compute, SoftBank's real estate and SK Hynix's memory orderbook all sit on the same demand curve.

The honest caveat is that the reporting is early. The Ohio backstop is described as being in talks, the SK figures are letters of intent, and a 0.14 percentage point CDS move is a shudder, not a repricing. What the coverage does not give you is the tenor of Nvidia's guarantee, how it will show up on the balance sheet, or whether the headline dollar totals are gross commitments or net of chips Nvidia will eventually sell back into the same deals.

For anyone underwriting AI infrastructure, whether SK Hynix, SoftBank or the lenders behind the Ohio site, the effective counterparty is now Nvidia. That is fine while chip demand keeps outrunning supply. It is the reason the bond desk is finally paying attention.