SpaceX Plans to Issue $40 Billion in Bonds to Purchase Chips, Minimum Rated Portion Expected Interest Rate Around 8.3%
SpaceX is finalizing a debt financing deal worth $40 billion, primarily to purchase Nvidia chips to meet its expanding AI computing power needs.
The minimum rated portion is expected to have an interest rate of about 8.3%, while the relatively secure portion backed by some chips is expected to be around 7.75%. This interest rate is more than 1 percentage point higher than the yield on the company's existing bonds. The transaction is led by Apollo and Goldman Sachs, with final pricing expected to be completed next week, and terms may still be adjusted.
Previous reports indicated that the financing structure is roughly $10 billion in bank loans and $30 billion in investment-grade debt. After going public in June, the company issued $25 billion in investment-grade bonds and held about $100 billion in cash and equivalents as of the end of June, while also having about $39.4 billion in debt and financing leases.
Over the past five years, credit default swap spreads have risen to around 197 basis points, and existing bonds have weakened in the secondary market. The market is generally cautious about AI infrastructure loans, with the sell-off of CoreWeave-related debt exacerbating this sentiment. The company is currently considering a merger with Tesla.
In August, Trump purchased $5 million in SpaceX bonds. The rise in interest rates for the new bonds reflects investors' increased risk premium demands regarding AI-related leveraged expansion, rather than the company having completed borrowing.
Market Mechanism: Nvidia, as a chip supplier and potential shareholder, benefits from large orders, with funds flowing from the credit market to AI hardware procurement; SpaceX accelerates computing power deployment through debt, but higher interest increases its debt burden, while existing bondholders face pressure from widening spreads, and the overall AI credit market is under pressure due to increased supply.
Source: Public Information
ABAB AI Insight
After completing an approximately $86 billion IPO in June, SpaceX quickly issued $25 billion in investment-grade bonds and integrated xAI into its business system, continuously expanding its computing power layout beyond Starlink and rocket business. The company has previously supported heavy asset investments through debt and equity financing, and this further debt issuance to purchase chips continues its path of shifting capital intensity towards AI infrastructure rather than relying solely on equity dilution.
Funds are primarily directed towards Nvidia chip procurement to support data center and computing cluster construction. The company's choice of debt over preferred equity issuance is related to stock price volatility post-IPO and the consideration of retaining cash reserves; arrangements led by institutions like Apollo reflect the capacity of private credit and investment-grade bond markets to absorb large AI orders, while also partially collateralizing chip assets to lower some interest rates.
This is similar to companies like CoreWeave that rely on debt to expand computing power facing a similar credit market adjustment, and is close to the path of companies like Oracle that accelerate hardware procurement through leverage in cloud and AI capital expenditures. SpaceX is currently in a phase of expanding from rocket and satellite business to AI computing power provider, with the scale of debt and interest costs becoming key variables constraining its expansion pace.
Essentially, this is about capital concentration: the capital required for AI infrastructure has exceeded the cash flow coverage capacity of a single company, forcing leaders to concentrate financing through large-scale debt, shifting risk from equity investors to credit investors. The mechanism is that chip supply is concentrated among a few suppliers, demand is explosively growing, while the interest rate environment and increased AI credit supply have jointly raised marginal financing costs, making the logic of "computing power as an asset" face higher debt service thresholds.
ABAB News · Cognitive Laws
The speed of computing power expansion is ultimately determined by interest rates.
Borrowing while having cash indicates that orders are scarcer than cash.
When debt scale doubles, credit premium arrives before profits.