SpaceX bonds weaken in secondary trading as 30-year spread widens 13 bps

Key Takeaways:

SpaceX's 30-year bond spread widened 13 basis points to +188 bps over Treasuries
The 5-year tranche held steady as investors favored shorter maturities
The $25 billion deal drew roughly $90 billion in orders at final pricing

SpaceX's inaugural $25 billion bond sale saw its longest-dated securities weaken in secondary trading Wednesday, with the 30-year tranche's yield spread widening 13 basis points from the final pricing level as investors showed a clear preference for shorter maturities.

"The market is pricing in execution risk on the longer end of the curve, which is unusual for an investment-grade debut," said Tom Brennan, an analyst covering IPOs and M&A at Edgen. "Bondholders are comfortable with Starlink's cash flows over five years but want a bigger premium to hold SpaceX credit for three decades."

Trace data showed the 30-year bonds traded at a spread of 188 basis points over comparable US Treasuries by 10:25 a.m. New York time Wednesday, up from the 175-basis-point spread at which the deal was priced late Tuesday. The 5-year portion of the offering held steady, reflecting demand concentration in the shortest maturity bucket. The company raised $25 billion across multiple tranches in what was its first-ever bond sale, attracting roughly $90 billion in total orders.

The weakness in long-dated bonds comes less than two weeks after SpaceX's record $75 billion initial public offering, which pushed the company's market capitalization above $2 trillion before the stock fell roughly 25 percent from its post-listing high of $225. The bond sale proceeds will fund chip and compute purchases for Grok, the large language model competing with OpenAI and Anthropic, as well as continued investment in AI infrastructure. S&P Global assigned SpaceX a BBB rating — the lowest investment-grade tier — citing Starlink's recurring subscription cash flow while flagging Grok as the riskiest segment due to massive upfront investment and an unclear monetization path.

SpaceX is not alone in tapping debt markets for AI spending. NVIDIA issued $25 billion in bonds last week despite generating $81.6 billion in quarterly revenue, as total supply-chain commitments reached $119 billion. The pattern underscores a broader shift: technology companies are borrowing to prepay years of GPU and infrastructure costs rather than drawing down equity.

The widening spread on SpaceX's 30-year bonds suggests that even with an investment-grade rating, the market is demanding a premium for long-duration exposure to a company whose most ambitious bets — orbital data centers and AI model development — remain unproven. The 5-year tranche's stability indicates that Starlink's satellite broadband business provides sufficient near-term credit support, but the steepening curve reflects uncertainty about whether Grok and the broader AI push will generate returns within a bondholder's typical holding period.

Lockup expirations on SpaceX equity, with at least 20 percent of shares set to be released after second-quarter results, could add further pressure. Morningstar placed a $780 billion valuation on the company focusing on its core rocket and Starlink businesses, suggesting investors wait for the stock to settle before buying.

This article is for informational purposes only and does not constitute investment advice.