Allianz CIO warns: SpaceX bond issuance is a bubble signal

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After completing a record-breaking IPO, SpaceX immediately launched a large-scale bond financing, heightening caution in the market. Allianz Group's Chief Investment Officer bluntly stated that this move is a typical signal the market is sliding into a "bubble zone."

According to media reports, Allianz Group CIO Ludovic Subran warned at this week's Global Insurance Summit, characterizing SpaceX's rapid bond issuance after its IPO as a "typical case" of the market transitioning from "healthy boom and overheating...to a bubble zone." Allianz manages assets totaling 800 billion euros.

SpaceX increased the size of its bond issuance from $20 billion to $25 billion, showing robust demand, but its financing costs remain higher than those of companies with similar ratings. Meanwhile, SpaceX’s share price has fallen back to $154 from its IPO high of over $225, with gains narrowing significantly.

A Supply Surge is Testing the Market’s Limits

This financing boom is not an isolated case. Both equity and bond markets have seen a wave of intensive large-scale deals, driven by record-high stock prices and credit spreads at their lowest in decades, prompting growing caution among some major investors.

In the stock market, following SpaceX's listing, the IPOs of Anthropic and OpenAI are also expected to follow soon.

Analysts point out that after more than two decades of shrinking net equity supply—mainly due to corporate buybacks and privatizations—the net supply of U.S. stocks is approaching a critical point where it may turn from negative to positive. Whether demand can absorb the continuously expanding supply has become a central concern for the market.

The bond market is also at a high point. Buoyed by the resilient U.S. economy, risk assets are broadly rising, and the financing spread for high-rated U.S. companies has narrowed to less than 80 basis points, near the lowest levels of this century.

Bond Investors Are "Not So Easily Fooled"

Subran was blunt in his remarks at the summit. He said that Musk’s rocket and artificial intelligence group just raised a large amount of money from the equity market, but bond investors are fundamentally different from stock investors. He stated:

"This guy just got $70 billion in 'game coins' and says he wants to take us to space. Stock investors might be willing to go to Mars with you, but bond investors will only ask: Where is my coupon?"

This highlights the fundamental difference between the two types of capital. Equity investors can accept long-term visions and short-term losses, while bond investors require clear and predictable cash flow returns.

Subran warned that in the face of SpaceX’s potential multi-billion-dollar losses, the bond market will be far more demanding than the stock market.

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