SpaceX successfully issued $25 billion in bonds, upsizing the offering from an initial $20 billion, after attracting nearly $90 billion in orders. This bond sale follows its record $86 billion initial public offering, marking a rapid double-dip into public markets. The company's unique ability to command such large capital raises, even with high-risk projects, highlights Elon Musk's influence and investor willingness to back ambitious ventures.
The bonds were priced at yields 1.1 to 1.75 percentage points above U.S. Treasuries, across five-to-30-year maturities. This pricing is notably higher than the 0.93 percentage point spread for similarly rated corporate bonds and even exceeds some double-B rated junk bonds, which stand at 1.56 percentage points. The elevated yield reflects a risk premium demanded by investors, who are cautious about SpaceX's substantial cash burn as it funds ambitious AI projects, Starship development, new data centers, and the expansion of its Starlink network.
Despite the perceived risks, Moody's assigned SpaceX a Baa1 investment-grade rating, with S&P Global also providing an investment-grade rating (BBB), though one notch lower. These ratings are underpinned by SpaceX's dominant position in rocket launches, the recurring revenue from Starlink, and its access to significant liquidity. John Lloyd of Janus Henderson Investors noted that credit investors are attracted to SpaceX not because it resembles a typical high-grade borrower, but because its core launch business has few competitors and its near-term capital expenditures are expected to yield substantial returns. The proceeds from the bond sale will primarily refinance a $20 billion bridge loan used to retire high-interest junk debt from X and xAI, and fund other corporate expenses. SpaceX CFO Bret Johnsen has committed to maintaining a strong investment-grade rating and keeping debt at no more than three times EBITDA.
The massive demand for the bond offering, which was oversubscribed by more than four times, underscores a divergence between equity and credit investors. While SpaceX's stock saw a $1 trillion drop in market value post-IPO, bond investors, often more conservative, are betting on the company's long-term revenue streams, particularly Starlink's approximately 12 million subscribers and substantial AI compute agreements with companies like Anthropic ($1.25 billion per month) and Google ($920 million per month), totaling an annualized run rate of $28 billion from AI infrastructure services alone. Investors from China and Hong Kong were excluded from the debt sale, mirroring restrictions in the IPO.
