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Bend but not Breaking

There have been 41 corporate defaults in the U.S. and one in Canada so far this year, the most in any region globally and more than double the same period in 2022, according to Moody’s Investors Service. Companies are grappling with a higher interest rate environment as Fed Chair Jerome Powell said that investors should expect more interest rate increase this year, albeit at a slower rate. 

Those that are either in need of liquidity or looking to refinance current obligations are finding it difficult in this higher interest rate environment: “Look at the cost of debt. You could reasonably get debt financing for 4% to 6% at any point on average over the last 15 years. Now that cost of debt has gone up to 9% to 13%.” said Mohsin Meghji, founding partner of restructuring and advisory firm M3 Partners. With an uncertain economic outlook, the cost of debt is becoming almost untenable which begs the question: how far can we go before it’s too much to bear? (CNBC)

Artificially Intelligent Buying Spree

AI is moving fast and until a large-language-model can provide a roundup on what’s happening in the sector, here’s a quick update: Dropbox launched its first corporate venture fund to focus on artificial intelligence; Workday added another $250 million to power innovation; Salesforce Ventures doubled down with an additional $250 million towards generative AI; and Amazon launched the AWS Generative AI Innovation Center which will pledge $100 million to accelerate enterprise innovation. 

These are big names and huge numbers but an interesting theme prevails: established players are keen to finance or help others in their mission to advance AI. The age old adage of build vs buy is on display and it appears big tech is pursuing the latter. 

MosaicML’s 6x exit

Databricks, a software and data analytics company, has acquired MosaicML, a generative AI platform that enables businesses to build and train their own generative AI/ML tools. MosaicML is also notably one of the initial investments in the ARK Venture Fund. After raising $64 million at a valuation of $222 million in its last funding round, the acquisition valued at $1.3 billion is an impressive leap for the company.  A big nod to ARK’s investment thesis, the deal also highlights the rapidly growing demand for AI talent and technology. As this landscape continues to evolve, we expect more of this kind of M&A activity in the space.

Fidelity enters the crypto chat

Another traditional financial giant, Fidelity, may be joining the pack of money managers including BlackRock, WisdomTree, Invesco, VanEck, and Bitwise, to file for a spot bitcoin exchange-traded fund (ETF) with the SEC. Crypto prices have continued to climb amidst the headlines as the recent filings revive optimism in the crypto market. (The Block)

Fidelity is no stranger to the crypto world, having offered institutional custody and trading services business through Fidelity Digital Assets since 2018. Whether the second time’s the charm for Fidelity or not, it’s another clear signal that institutions continue to have a positive long-term outlook for Bitcoin.

The majority of these news snippets were sourced from Titan which has also provided links to their sources.