SpaceX recently debuted a $25 billion bond offering, comfortably raising the funds in a five-part transaction. However, this bond debut coincided with a substantial sell-off in the company's stock price, wiping $400 billion off its market value as investors began to grasp the immense capital expenditures required for SpaceX's ambitious projects. The bond deal was heavily oversubscribed, attracting around $90 billion in orders, particularly for shorter-term bonds offering relatively high spreads compared to companies like Meta Platforms and Alphabet.
Despite the immediate stock decline and heavy projected losses, ratings agencies S&P, Moody's, and Fitch all assigned SpaceX investment-grade ratings (BBB, Baa1, and BBB+ respectively), with stable outlooks. This decision has drawn criticism given the company's anticipated negative cash flow of almost $230 billion by 2029, even with a five-fold revenue increase. Analysts at S&P project SpaceX will need to raise almost $150 billion in equity and accumulate nearly $250 billion in debt by the end of the decade. S&P notably disregarded SpaceX's plans for Mars colonization and in-space data centers in its quantifiable assessment, deeming them not yet quantifiable.
The initial bond pricing saw SpaceX's 30-year bonds at 175 basis points over US Treasuries and its 2036 bonds at 140 basis points. However, by the end of the week, these bonds widened significantly, with 30-year bonds trading at 196 basis points over and 2036s at approximately 156 basis points, indicating considerable pressure in the secondary market. The agencies justified their ratings by highlighting SpaceX's $100.8 billion cash pile, largely from its previous initial public offering, and management's commitment to maintaining leverage below three times EBITDA, though bond investors are more concerned with free cash flow.
SpaceX's initial public offering (IPO) raised $86.2 billion in primary proceeds, and after its first day of trading, the company achieved a staggering valuation of $2.1 trillion. This success was driven by investor confidence in the space economy, despite the futuristic nature of Elon Musk's plans, which include building AI data centers in space and colonizing Mars. The company's dominance in orbital launches, accounting for almost 51 percent globally, and Starlink's command of the satellite communications market further bolstered investor sentiment. SpaceX also agreed in April to acquire autocode generator Cursor for $60 million in stock.
