- The proposed deal would reportedly be a delayed-draw term loan that would be backed by a previously-signed contract with Meta under which the company agreed to pay CoreWeave up to $14.2 billion for its services.
- Although CoreWeave has a speculative-grade credit rating from top credit agencies, including Meta in its loan application will likely boost it to an investment-grade rating on the loan, as per the report.
- The company is reportedly discussing the new loan’s pricing at about 2.25 percentage points above the Secured Overnight Financing Rate.
CoreWeave Inc. (CRWV) is reportedly seeking a loan of $8.5 billion from banks to fund a cloud computing capacity buildout for Meta Platforms Inc. (META).
According to a report from Bloomberg, which cited people familiar with the matter, the proposed deal would be a delayed-draw term loan that would be backed by a previously-signed contract with Meta under which the company agreed to pay CoreWeave up to $14.2 billion for its services.
The deal would also be backed by a separate, previously unreported agreement between the two companies valued at over $5 billion, according to people cited in the report.
Morgan Stanley and Mitsubishi UFJ Financial Group Inc. are among the banks that CoreWeave is looking to raise the funds from, and the deal is expected to close in March, as per the report.
Shares of CRWV closed 9.3% higher on Tuesday, climbing 0.08% higher after-hours at the time of writing.
The Meta Advantage
Although CoreWeave has a speculative-grade credit rating from top credit agencies, including Meta in its loan application will likely boost it to an investment-grade rating on the loan, as per the people cited in the Bloomberg report.
This would result in lower borrowing costs. The company is discussing the new loan’s pricing at about 2.25 percentage points above the Secured Overnight Financing Rate. This is likely to be an interest rate of about 6% at current levels, as per the people.
Although the new loan does not require a parent guarantee given the strength of Meta’s contracts, CoreWeave is still expected to reflect it on its balance sheet for transparency, the report added.
Morgan Stanley and MUFG are privately syndicating the loan to additional lenders, as per the report.
How Did Users React On Stocktwits?
On Stocktwits, retail sentiment around CRWV shares remained in the ‘bullish’ territory over the past 24 hours amid ‘high’ message volumes.
The company is expected to report fourth-quarter (Q4) earnings on Thursday. Shares of CRWV have risen more than 148% in the past year.
For updates and corrections, email newsroom[at]stocktwits[dot]com.