Elon Musk's SpaceX finalized its inaugural bond offering, raising $25 billion with senior unsecured notes across five tranches. These include $7.0 billion at 5.350% due 2031, $6.0 billion at 5.650% due 2033, $6.0 billion at 5.875% due 2036, $2.5 billion at 6.600% due 2046, and $3.5 billion at 6.650% due 2056. The offering, which is expected to settle on June 26, 2026, aims to repay an outstanding $20 billion bridge loan facility, cover associated fees, and provide funds for general corporate purposes, particularly capital-intensive AI projects through its ties to xAI.
The bond offering followed SpaceX's record-breaking initial public offering (IPO) and was met with both demand and some questions in the debt markets. Despite a limited public financial record and expectations of sustained negative free cash flow due to heavy capital spending, Moody's Ratings assigned SpaceX a Baa1 investment-grade rating, matching Nvidia Corp.'s initial rating a decade prior. This investment-grade status is significant for SpaceX, which Oppenheimer analysts project could raise $400 billion in the debt market by 2031, as it provides substantial capital savings compared to a junk rating, which Tesla, another Musk company, contended with for years.
While the company has $100 billion in cash, the additional $25 billion in debt is primarily allocated to refinancing the existing $20 billion bridge loan. The decision to raise more capital has caused some investor concern, particularly after the company's IPO raised $75 billion. Stock investors reacted negatively, with SpaceX shares dropping 16% to be up only 15% from their offering price of $135, as markets reacted to the substantial capital expenditure plans, a common reaction to increased spending announcements from major AI companies like Amazon and Alphabet.
The pricing of SpaceX's 10-year notes tightened to about 1.4 percentage points more than Treasuries, reflecting investor interest. Bankers initiated calls with investors last week, initially discussing a $20 billion bond sale following the IPO. The final offering size exceeded these initial estimates, showcasing strong market appetite for the company's debt, despite some skepticism about the rapid investment-grade rating given SpaceX's financial profile. The move aligns with a broader trend in the market, with JPMorgan reporting $300 billion in AI-related debt raised since November.
