SpaceX taps the bond market for the first time to fund AI

Fresh from a record IPO that helped make Elon Musk a trillionaire, SpaceX is raising at least $20bn in its debut bond sale to bankroll a vast AI build-out.

SpaceX is about to do something none of Elon Musk’s companies has done before. It is borrowing money from public bond investors.

On Monday the rocket maker kicked off its first sale of investment-grade bonds. The company is seeking to raise at least $20bn, according to Bloomberg.

The banks that provided SpaceX’s bridge financing are arranging the investor calls. They are Bank of America, Citigroup, Goldman Sachs, JPMorgan and Morgan Stanley. The new notes will carry maturities of five to 30 years.

What the money is for

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Most of the cash will refinance a bridge loan of roughly the same size. That loan makes up the bulk of SpaceX’s $29.1bn in long-term debt. The rest is for general corporate purposes.

The deal won solid grades from all three big agencies. Moody’s rated it Baa1, Fitch put it at BBB+, and S&P set it one notch lower at BBB. All three sit comfortably in investment-grade territory, several steps above junk.

SpaceX is not short of cash. It disclosed about $100.8bn on hand, a figure Bloomberg pegged at roughly $101bn as of 19 June. Its shares still fell about 8 per cent, extending a post-IPO slide that had already cooled the debut euphoria.

A record IPO, days earlier

The bond sale lands barely a week after SpaceX’s blockbuster stock-market debut. The record listing priced at $135 a share and raised about $75bn.

That debut briefly pushed SpaceX’s market value past Amazon and ahead of Broadcom, Meta and Tesla. It also handed Musk a milestone of his own, making him the world’s first trillionaire on paper.

Chief financial officer Bret Johnsen and president Gwynne Shotwell now have the balance sheet to match the company’s ambition.

Borrowing to build AI

The target of all this spending is artificial intelligence. SpaceX wants to build data centres, including some it plans to put in orbit, to feed the computing demands of the AI boom.

The economics are already taking shape. The company has signed about $75bn in contracts to supply computing power to Google and Anthropic, a fast-growing earnings driver alongside its Starlink network.

It is not alone in turning to debt. Alphabet and Amazon have together raised more than $300bn since November, and Nvidia recently sold $25bn of bonds. SpaceX is simply the latest giant to borrow heavily against the promise of AI.

The risk in the rocket

The scale gives some analysts pause. Oppenheimer’s Timothy Horan models SpaceX carrying more than $400bn in net debt by 2031, more than triple Oracle’s load.

Data centres swallow cash for years before they pay off. The plans also invite regulatory scrutiny and questions over their energy and environmental cost.

Then there is Musk himself. His concentrated voting power means investors are lending to a company where one person holds the controls. Moody’s still leaned on the Starlink franchise and SpaceX’s strategic value to the US government to justify the grade. For now, the bond market looks ready to fund the bet.