SpaceX is soliciting between $20 billion and $25 billion from a debut bond offering, attracting approximately $30 billion in investor orders even before the formal sales process began. This deal, if successful at its targeted size, would be among the largest this year, according to Bloomberg data. The company has upsized the initial offering to $25 billion, with total demand reaching nearly $90 billion, forcing bankers to manage orders, particularly for the five-year tranche.
The bond offering is viewed by some as a "leap of faith" due to SpaceX's unusual financial profile for an investment-grade borrower. Ross Pamphilon, chief investment officer for fixed income at Impax Asset Management, noted the challenge in modeling a business with a "deeply free-cashflow negative" xAI operating alongside the strong Starlink satellite franchise. S&P, which rates SpaceX BBB (one notch lower than Moody's Baa1), anticipates the company will remain cash-flow negative until 2030, with a sharp increase in cash burn expected in 2027 and 2028, and borrowings potentially climbing to $132 billion in 2028 from nearly zero currently.
Proceeds from the bond sale, structured in five tranches with maturities ranging from five to 30 years, are intended to refinance a $20 billion bridge loan and cover other corporate expenses. The longest-dated bonds are being offered at about two percentage points more than United States Treasuries. This premium, exceeding the average for similar-rated issuers, reflects concerns over SpaceX's substantial capital expenditure on rockets, AI ventures, and planned space-based data centers, and the high-stakes growth agenda. Fixed-income managers showed a preference for shorter maturities.
Despite the risks, the bond sale has garnered significant interest, demonstrating the credit market's trust in Elon Musk's ambitious vision for reusable rockets, a global satellite network, artificial intelligence, and space-based data centers. Lending institutions like Bank of America and Morgan Stanley are managing the sale. The recent decline in SpaceX's market capitalization since its IPO, erasing over $600 billion, has added some scrutiny to the equity cushion supporting bondholders. All three major credit rating agencies (Moody's, Fitch, and S&P) assigned investment-grade ratings, citing SpaceX’s dominant position in orbital launch and Starlink’s substantial subscriber base as key strengths.
