SpaceX Has to Pay Up: $40 Billion of Debt at Rates as High as 8.3%

According to Semafor, a $40 billion debt raise is being finalized at sharply higher interest rates than when SpaceX last tapped bondholders.

Based on Semafor’s reporting, citing people familiar with the deal:

Size: $40 billion, led by Apollo and Goldman Sachs

Riskiest portion: expected to carry interest of about 8.3%

Safer portion, backed by some of SpaceX’s chips: likely to price next week around 7.75%

Comparison: that’s more than 1 percentage point above where SpaceX’s existing bonds currently trade

Timing: Pricing could change before the debt is finalized, expected sometime next week. Goldman and Apollo declined to comment.

Semafor points to a few things:

The AI-loan market pulled back sharply over the past few weeks.

SpaceX’s existing bonds weakened, as strong earnings were overshadowed by massive spending plans and concerns about the debt load.

CoreWeave’s debt selloff fueled broader AI fears.

Default insurance on SpaceX widened, meaning the cost of protecting against a default went up, a sign of some misgivings about the company’s plans.

A possible Tesla merger adds uncertainty, since SpaceX is reportedly considering one.

Equity investors have been willing to pay up for a growth story.

Bond investors want to get paid for the risk of financing it.

One is betting on the upside and the other is worried about the downside.

Collateral also matters. Part of the debt is backed by chips.

That’s reassuring only as long as the chips hold their value.