Stress index 48: neocloud stocks flash again after capex misses

Neocloud stocks flash again after capex misses

The index slipped to 48 from 51, but that's a split story: neocloud stocks are flashing again after Microsoft and Alphabet came in light on capex, while BDCs popped and their discount narrowed to 8.9%. Don't call that a credit all-clear, since more than half of the BDC gauge's big drop was an Oct 1 selloff falling out of the 20-day window.

Stress index: 48 out of 100, Elevated, down 3. 2 of 6 layers are flashing: weakest borrowers and funds. The chain reaction isn’t complete yet: collateral isn’t flashing.

Layers today, score and 1-day move: Collateral 25 calm · Weakest borrowers 84 flashing (+4.0) · Loans 43 watch (−13.0) · Funds 77 flashing (−9.7) · Plumbing 48 watch (−0.3) · People 12 calm

Since yesterday

• Neocloud stocks rose from watch to flashing (70.2 → 85.9): Group down about 32% in a month after Thursday's drop; CoreWeave $60.74 (source)
• Marks vs market prices dropped from watch to calm (68.3 → 29.2): BDC gap with junk nearly closed at 0.72 pts, but mostly a window effect; marks still near cost (source)
• Public BDC discounts dropped from watch to calm (60.4 → 31.3): Listed BDCs 8.9% below book, weighted by size (source)
• Microsoft's $45.2B quarterly capex misses the $50.7B estimate and its 2026 outlook drops to about $170B on late third-party capacity; neoclouds fall 5-9% the next day: TipRanks: Why CoreWeave, Nebius and IREN are tumbling, Oct 29, Oct 28 · Weakest borrowers crack (article)
• Fitch: Q3 redemption requests at non-traded BDCs average 9.8% of shares, still above the 5% cap; Blue Owl Technology Income hits 39%: InvestmentNews: Pace of investors selling nontraded BDCs slows but remains significant, Oct 13 · Funds feel pressure (article)
• Willow Tree Capital Corp: Opens a cash-out window: SC TO-I filed Oct 29 (filing)
• And 4 smaller moves on the full brief

On the line

• Public BDC discounts: 31.3 (calm), 6.2 below the watch line (37.5)

The tape: Oct 29 close vs Oct 28

• Junk bonds (HYG): $77.58, −0.0% on the day, +0.6% over 5 days, 4% below its high
• Listed BDCs (BIZD): $12.48, +2.5% on the day, +3.5% over 5 days, 17% below its high
• Private credit managers: +4.5% on the day, +3.8% over 5 days, 29% below its high
• Neoclouds (5): −6.6% on the day, +3.8% over 5 days, 59% below its high
• CoreWeave: $60.74, −5.0% on the day, +9.2% over 5 days, 57% below its high
• Oracle: $139.56, −3.4% on the day, +11.2% over 5 days, 49% below its high

Flashing now (5)

2 of 5 got new data since yesterday. The other 3 haven't in 3 to 28 days, and stay flashing until new data says otherwise.

• Neocloud stocks (new data Oct 29): Group down about 32% in a month after Thursday's drop; CoreWeave $60.74 (source)
• Delayed projects (new data Oct 29): Roughly 30-50% of 2026 US capacity delayed or canceled; Microsoft says third-party deliveries slipped (source)
• Neocloud bonds (data from Oct 22, 8 days old): CoreWeave 2031 notes yield a record 15.76%; no newer prints (source)
• Redemption gates (data from Oct 2, 28 days old): Q3 requests eased to 11.5% of NAV but about 60% still went unfilled (source)
• Credit default swaps (data from Oct 27, 3 days old): CoreWeave 5-yr CDS last seen at 1,041bp, still above 1,000 (source)

More on this: Where can I find free data on BDC redemption requests, tender offers and discounts to book value?

The gauges

• Credit stress (OFR): −0.89 (−0.03 vs prior print), Oct 27 print; above zero is more stress than usual
• Listed BDCs vs book, by size: −8.9% (+2.5 pts vs last issue), 5 of 10 more than 10% below
• Funds running cash-out windows: 55 (+4 vs last issue), last 90 days of SEC filings
• Funds paying out less than asked: 1 (±0 vs last issue), lowest: Barings Private Credit Corp paid 46.84%

Slow gauges, latest print: Bond fear premium −38bp (Sep 2026) · Corporate bond spread 93bp (Sep 2026) · Recession odds 9% (Sep 2026) · Bank loans to nonbanks +19.6% (Oct 14) · Banks tightening loans 0.0% (Jul 2026) · Median PIK share 11.0% (quarterly)

Worth watching today

• CoreWeave reports Nov 11, with its five-year CDS last seen at 1,041bp and its stock at $60.74 after Thursday's 5% drop.
• Q3 NAVs and PIK numbers from the BDCs land in the first half of November; most of the 8.9% discount still leans on June NAVs.
• Fourth-quarter tender results: Q3 requests eased to 11.5% of NAV, but only about 40% got filled and $8.2B is still stuck.

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