After its record-breaking IPO, SpaceX issues another $20 billion in debt; Musk aims to create a "modern-day Union Pacific Railroad Company."

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SpaceX's financing story is far from concluded with its IPO.

According to Bloomberg, after completing its listing, SpaceX is rapidly turning to the bond market to advance its artificial intelligence and orbital data center plans. The company has begun preparing its first bond issuance, with a scale of at least $20 billion; last Thursday, three major rating agencies awarded it investment-grade ratings, paving the way for bond issuance.

Analysts from Goldman Sachs and Evercore ISI estimate that by 2031, SpaceX's capital expenditures will exceed $1 trillion, most of which will be allocated to AI business and space data center construction. It is also estimated that by 2031, the company's net debt could exceed $400 billion, posing an unprecedented funding stress test for the capital markets.

This financing volume has stirred positive expectations in the market, but also notable caution. Bond market participants question SpaceX’s ability to maintain investment-grade ratings while taking on large-scale debt; seasoned short sellers compare it to the overexpansion of the 19th-century Union Pacific Railroad—where a national building frenzy led to a capital craze, but ultimately ended in financial and reputational quagmire. Musk likened SpaceX to Union Pacific during the IPO roadshow, stating his goal was “to make Star Trek real”, backing up trillions in valuation, but the historical echoes of this analogy make some observers uneasy.

Equity Financing Ends, Debt Financing Takes Over

According to sources cited in reports, SpaceX CFO Bret Johnsen and President Gwynne Shotwell explicitly told potential investors that this IPO will be the company's final stock sale. To avoid diluting shareholder interests, including Musk’s own, the company plans to mainly rely on debt market financing, and highlighted its investment-grade rating throughout the IPO process.

A team led by Oppenheimer & Co analyst Timothy Horan predicted in a June 18 report that SpaceX’s net debt will climb from about $13 billion now to over $400 billion by 2031, surpassing almost every other publicly listed US company and more than triple Oracle’s current debt. The team expects debt to be the main source of funding, supplemented by about $40 billion in additional equity financing.

If realized, SpaceX’s capital expenditures could, in some scenarios, exceed $700 billion per year by 2031. McKinsey estimates that just the construction costs of ground data centers could require $7 trillion by the end of this decade, and SpaceX’s orbital data center plans will further drive this number higher.

Doubts in the Bond Market; Asymmetric Risk-Reward for Investors

Despite SpaceX’s investment-grade rating, bond market participants remain cautious regarding its large-scale borrowing ability.

“The vast majority of capital expenditure will have to be solved with equity financing, not the bond market,” said Jim Fitzpatrick, head of US investment-grade research at Allspring. “There’s very limited space to issue large amounts of bonds while maintaining investment-grade ratings, especially since this company has no history with rating agencies.”

Some investors directly point to structural disadvantages in bond investing. Asterozoa Capital CIO Joe Hegener stated: “If you want to ride the wave, regardless of valuation, at least with stock you have real upside. In the bond market, your upside tops out at the coupon, while your downside is the entire principal.”

Meanwhile, SpaceX’s financing plans overlap in timing with the IPO preparations of Anthropic and OpenAI, which could seek tens of billions in funding as early as this year. Tech giants like Alphabet are also ramping up AI infrastructure investment, making the supply pressure in the capital markets hard to ignore.

Musk Compares Himself to “Union Pacific”, But Experts Call It “Exploiting Public Ignorance”

Musk likened SpaceX to the 19th-century Union Pacific Railroad company during the IPO roadshow, stating “people thought they were crazy”, but this analogy is seen as counterproductive by some historians and market experts.

Stanford University Emeritus Professor of American History Richard White bluntly stated, Union Pacific was “a mess of self-dealing and corruption”, and using it as a corporate model “exploits Americans’ deep ignorance of their history and of financial markets”.

Veteran short seller Jim Chanos said that SpaceX, along with tech giants, Anthropic, and OpenAI, is part of a collective expansion involving massive capital consumption unlikely to yield returns within five to ten years—“huge spending, with little result except for those selling the shovels”. He also pointed out that the Credit Mobilier scandal in Union Pacific’s history (insiders enriching themselves through contractor companies) and Musk’s active use of this analogy is “deeply ironic”.

Amid Doubts, the Financing Boom Endures; AI Infrastructure Is Reshaping Capital Market Structure

Despite skepticism, bankers and capital market participants remain optimistic about the overall financing outlook, noting that the AI infrastructure boom is reshaping market structures in multiple dimensions.

Bloomberg data shows that US IPOs and share reductions have reached $163 billion this year; even excluding SpaceX's IPO, this is a 28% year-on-year increase. JPMorgan strategist data indicates that since last November, AI-related debt issuance has exceeded $300 billion across multiple credit markets, pushing total issuance this year toward historic highs.

Lisa Clyde, global co-head of capital markets at Bank of America, stated: “All of this is changing the capital markets in quite profound ways. We’re seeing boundaries between products, public and private markets increasingly blur, and companies must think in more creative ways about on- and off-balance-sheet financing.”

Brown Brothers Harriman CIO Justin Reed characterized this financing wave as a systemic shift: “We’re simultaneously building data centers, semiconductors, energy infrastructure, and satellite networks. Capital is moving from lightweight application-layer financing to underwriting the entire economic ecosystem—that’s the root of such astonishing demand.”

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