SpaceX plans to issue $20 billion in corporate bonds: How will the funds be used, and what do the three major credit rating agencies think?

SpaceX plans to issue at least 20 billion USD in investment-grade corporate bonds to repay the bridge loan obtained after acquiring xAI this February.
(Background: SpaceX pushes for an IPO! Musk aims for a valuation of 1.5 trillion USD, with fundraising exceeding 30 billion USD)
(Additional context: Today, SpaceX surged another 7%, breaking through a 2.2 trillion USD market cap! Musk’s net worth skyrocketed briefly to 1.2 trillion USD)

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• How do the three major credit rating agencies evaluate?
• Where does this money come from, and where does it go?
• How does the market view this transformation?

SpaceX, with a market value of two trillion USD, is scheduled to meet with investors as early as next week to discuss issuing at least 20 billion USD in investment-grade corporate bonds. This marks the company’s first-ever financing from the public bond market, as it now has an AI bill to pay.

How do the three major credit rating agencies evaluate?

For SpaceX’s corporate bonds, Moody’s assigned a “Baa1,” Fitch gave a “BBB+,” and S&P Global rated it “BBB,” all within the investment-grade range.

“Investment-grade credit ratings,” simply put, are the entry permit to the bond market. Ratings above this line allow pension funds, insurance companies, and sovereign funds to buy; below this line, these institutions won’t even consider it. For SpaceX, achieving investment grade means access to the largest and lowest-cost capital pools worldwide, rather than relying solely on venture capital or private placements.

The fact that the three agencies issued ratings on the same day is itself a signal. However, S&P also issued a warning in its rating statement: SpaceX’s space and satellite connectivity business (i.e., Starlink) is highly competitive, but its AI division faces uncertainties due to “massive capital requirements and fierce competition.”

Where does this money come from, and where does it go?

In February this year, SpaceX acquired Elon Musk’s AI startup xAI through a share swap, simultaneously securing a 20 billion USD “bridge loan” provided jointly by five major banks: U.S. Bank, Citigroup, JPMorgan Chase, Goldman Sachs, and Morgan Stanley. The characteristic of a bridge loan is: high interest rates and short terms, intended to “complete the transaction first, then replace it with cheaper long-term financing.”

The purpose of this bond issuance is to repay that bridge loan. Essentially, it’s converting a short-term high-interest loan into long-term, low-interest corporate bonds. From a financial logic perspective, this is called “refinancing,” not expansion, but cost reduction.

But behind this move lies a bigger implication: SpaceX is converting the acquisition cost of xAI from a private placement agreement into publicly traded bonds. This means that the 20 billion USD AI bet is now collectively borne by institutional bond investors, rather than just a few large private equity funds.

How does the market view this transformation?

Musk’s logic is: SpaceX is no longer just a rocket company. It also aims to build data centers, computing hardware, and power infrastructure, and by acquiring xAI, it directly enters the large language model race. This path requires “hundreds of millions of dollars” of continuous investment, and corporate bonds are currently the lowest-cost financing method.

The issue is, xAI’s position in the AI market isn’t easy. It needs to find a foothold among OpenAI, Google DeepMind, and Anthropic, while also facing pressures from compute resource procurement, engineer competition, and regulatory uncertainties. S&P pointed out the “uncertainty,” which isn’t just a polite warning but a truthful description of the brutal logic behind the AI arms race.

A company that can simultaneously win in space, satellite communications, and AI competitions has never been achieved in history. The bond market has given it an entry ticket, but an entry ticket doesn’t guarantee a championship trophy… Will Musk truly accomplish a historic feat? The whole world is watching.