Credit investors are selling CoreWeave's bonds on Wednesday, some to new lows, over a risk that has little to do with its balance sheet: state governments that may slow data-center construction.

The clearest case is Texas. CNBC reports that Democrat Gina Hinojosa beat Abbott and has pledged a moratorium on new data centers, and on approvals for them, until laws are passed to protect Texans. Bloomberg, as reported by Quartz, says Democrats Amy Acton in Ohio and Keisha Lance Bottoms in Georgia are also governors-elect who campaigned on slowing construction. So far these are campaign pledges, not policy. The bond market is pricing the chance that they become policy.

Texas matters because of its size in the build-out. Wells Fargo estimates the state holds 27% of planned US data-center gigawatts, CNBC reports. According to 24/7 Wall St, CoreWeave runs its GPU cloud capacity through data-center partners that include Texas facilities. The shares are lower too. CNBC reported CoreWeave down 4% in morning trading, while Quartz, citing Bloomberg, put the fall at 7.2%, to $49.85 in New York, as of 10:24 a.m.

The debt was already weak. On October 15, CoreWeave's five-year credit default swaps, which are insurance against default, hit a record 1,194.5 basis points. Its 2031 bonds fell to 82.75 cents on the dollar in mid-October. By October 27 the swaps stood at 1,041 basis points and the bonds were trading well below par.

That is why this looks different from earlier rebounds and sell-offs, which followed words from executives and analysts. A permitting limit is a regulatory constraint on growth, and credit investors have shown little patience for reassurance when nothing in the business has changed.

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