SpaceX is currently in the process of a debut bond offering, aiming to raise between $20 billion and $25 billion. The company has already seen strong investor demand, with approximately $30 billion in orders placed even before the formal sales process began. This makes it one of the largest bond deals of the year. Proceeds from the offering are intended to refinance an existing $20 billion bridge loan and cover other corporate expenses.
Despite the successful fundraising, some analysts express skepticism. SpaceX, while a dominant launch provider central to the US space program and backed by its Starlink revenue, operates with a high cash burn, spending heavily and relying on external financing. For example, S&P Global, which rated SpaceX's bonds BBB—one notch lower than Moody's Baa1 and Fitch's BBB+ ratings—expects the company to remain cash-negative until 2030, with borrowings potentially climbing to $132 billion by 2028 from near zero currently. The offering includes five tranches of bonds with maturities from five to 30 years, with the longest-dated bonds offered at a yield approximately two percentage points above United States Treasuries.
The offering comes amidst a turbulent period for SpaceX's stock, which has fallen since its IPO, erasing over $600 billion in market value from a peak of $3 trillion. This decline has put scrutiny on the "equity cushion" protecting bondholders. However, credit investors appear less fazed, with some, like John Lloyd of Janus Henderson Investors, citing SpaceX's strong launch business with few competitors and its near-term capital expenditure focused on projects expected to generate returns. Ross Pamphilon of Impax Asset Management acknowledged the company's strong franchise in satellite internet (Starlink) but also its significant "AI cash burn."
The company's debt strategy is part of a broader trend among major tech firms, including Nvidia and Google, to tap capital markets for AI infrastructure funding. SpaceX has received investment-grade ratings (Baa1 from Moody's, BBB+ from Fitch, and BBB from S&P Global) paving the way for cheaper borrowing. The company reportedly holds about $100.8 billion in cash and its Starlink business generates significant recurring revenue from approximately 12 million subscribers. Additionally, SpaceX is projected to generate about $2.32 billion per month from AI compute agreements, notably with Anthropic ($1.25 billion/month), Google ($920 million/month), and Reflection ($150 million/month), suggesting an annualized revenue run rate nearing $28 billion from these services alone. This strong and growing revenue diversification, combined with its market dominance, helps underpin investor confidence in its debt offering despite the equity market's recent unease.
