After the IPO, borrowing! SpaceX launches its first investment-grade bonds, $20 billion to bet on the future of AI

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SpaceX has officially launched its first investment-grade bond issuance, marking the first step in large-scale fundraising for Elon Musk’s rocket, satellite, and artificial intelligence conglomerate following its record-breaking IPO.

According to SpaceX’s 8-K filing submitted on June 22, the company has initiated the issuance procedure for its first batch of senior unsecured notes, with the stipulation "subject to market conditions and other factors." The size of this issuance is expected to be at least $20 billion, with the funds mainly used to repay a bridge loan of similar scale.

Before this bond issuance was announced, SpaceX had already received investment-grade credit ratings from the three major agencies last week, paving the way for it to enter the bond market at a lower cost. The market broadly views this issuance as the prelude to SpaceX’s large-scale borrowing efforts to support its AI ambitions following its $75 billion record IPO.

Five major banks jointly underwriting, investor roadshow starts Monday

According to a source (who requested anonymity due to lack of authorization to speak publicly), SpaceX has commissioned Bank of America, Citi, Goldman Sachs, JPMorgan Chase, and Morgan Stanley to arrange investor conference calls, scheduled for Monday. These five banks were also the institutions that previously provided SpaceX with temporary bridge financing.

The notes to be issued are senior unsecured debt and will rank equally in repayment priority with all existing and future non-subordinated debts, liabilities, and other obligations of SpaceX.

Repaying bridge loans, easing long-term debt pressure

The core purpose of this fundraising is to replace SpaceX’s existing temporary bridge loans. According to Bloomberg, the bridge loan is about $20 billion, forming the main part of SpaceX’s total $29.1 billion in long-term debt.

By converting short-term bridge financing into longer-term investment-grade bonds, SpaceX can optimize its debt structure, reduce refinancing risk, and lock in relatively stable long-term capital costs.

All three major rating agencies award investment-grade, with slight differences in ratings

Last week, Moody’s, Fitch, and S&P all assigned investment-grade ratings to SpaceX, all in the BBB range, though there are subtle differences.

Moody’s assigned a Baa1 rating, Fitch BBB+, both three notches above junk status; S&P gave a BBB rating, one notch lower than the other two. The ratings from the three agencies provide crucial endorsements for SpaceX’s entry into the investment-grade bond market, helping to attract a wider range of institutional investors and lower financing costs.

After the IPO, AI ambitions drive large-scale borrowing

This bond issuance is an important part of SpaceX’s capital operations following its $75 billion IPO. Bloomberg previously reported that this issuance is expected to be only the beginning of SpaceX’s large-scale borrowing plans, with subsequent financing providing ammunition for the company’s AI business expansion.

As a comprehensive enterprise spanning rocket launches, satellite internet, and artificial intelligence, SpaceX seeks to continuously support its ambitious technology investment plans through the capital markets.

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