Following the issuance of $25 billion in investment-grade bonds in June, SpaceX plans to raise another $40 billion to fund large-scale purchases of NVIDIA chips, further betting on the infrastructure construction of AI.

According to a recent report by the British "Financial Times" citing informed sources, SpaceX plans to raise funds through approximately $10 billion in bank loans and $30 billion in investment-grade bonds to cover this massive chip order. Apollo is expected to lead the transaction and distribute the debt to a wide range of institutional investors; bond giant Pimco is also among the few lenders participating in the negotiations. The transaction is expected to be completed in 2027.

This transaction once again demonstrates that the construction of data centers and chip infrastructure under AI is devouring an increasing amount of capital. Non-traditional financing channels such as private lending are also becoming important sources of funds to support this round of AI capital expenditures.

Elon Musk increases his investment in NVIDIA's architecture

SpaceX The direct purpose of this financing is to provide financial support for the large-scale procurement of NVIDIA chips. Musk clearly stated during the SpaceX earnings call in August of this year that the company has decided to build entirely on the NVIDIA platform. Musk said:

"We decided to build entirely on NVIDIA, as we believe that the Vera Rubin architecture is the optimal one. We consider this to be the best AI computer, and we place great importance on our close collaboration and partnership with NVIDIA at multiple levels."

Vera Rubin is NVIDIA's latest generation of cutting-edge AI computing platform. Musk's statement also further clarifies the technical approach for this large-scale chip procurement by SpaceX and strengthens their cooperative relationship with NVIDIA.

Investment-grade ratings support large-scale financing.

SpaceX's ability to undertake such large-scale debt financing is closely related to its investment-grade credit rating. Shortly after completing a $86 billion initial public offering in June of this year, the company received a BBB rating, which falls within the lower range of investment grades, and within less than two weeks of going public, it completed the issuance of $25 billion in investment-grade bonds.

Investment-grade ratings enable SpaceX bonds to be included in the investment portfolios of a wider range of institutional investors. Compared to junk-grade bonds, institutions such as insurance companies and pension funds typically have a larger capacity for investing in investment-grade bonds, thus providing a broader base of potential buyers for SpaceX to conduct large-scale debt financing.

However, SpaceX bonds have previously shown clear signs of pressure. According to MarketAxess data, the current trading price of its bonds maturing in 2056 is about 85 cents on face value, with a yield about 2.27 percentage points higher than that of U.S. Treasury bonds, which is close to the level of junk bonds. Reports citing analysts suggest that Musk's limited financial information disclosure is an important reason why some investors are cautious about SpaceX debt.

Insufficient information disclosure once deterred investors.

This financing is not SpaceX's first attempt to seek external funds for chip purchases, but previous efforts were not successful. According to reports citing informed sources, when SpaceX presented this multi-billion-dollar chip procurement financing to some investors, they only provided a two-page brief transaction memorandum that even included space images and an arrow indicating that the company would build a data center "somewhere in the universe."

The report quotes an informed source as saying:

"How can we present this to the investment committee?"

The introduction of Apollo to lead the transactions this time is, to some extent, aimed at making up for the aforementioned shortcomings. With the credibility and distribution network of Apollo among institutional investors, SpaceX is expected to be able to facilitate the implementation of this large-scale financing more smoothly.

Apollo In-depth Layout AI Chip Financing Market

For Apollo, this transaction is the latest move in its ongoing expansion of investment-grade corporate lending business. The credit business under Apollo manages assets worth $800 billion and has made financing for high-rated corporations a core part of its operations, having previously led several billion-dollar financing deals for large companies such as Intel and Bayer. Its life insurance and annuity subsidiary, Athene, typically subscribes to a large portion of such offerings.

In June this year, Apollo also led a $35 billion chip financing deal to purchase processors from Broadcom, a competitor of NVIDIA, setting a record for the largest single transaction in the private credit market at that time.

At a more macroscopic level, in August of this year, NVIDIA announced a collaboration with several top institutions on Wall Street to jointly establish a financing platform worth $500 billion. The institutions that signed the memorandum of understanding include Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs, and KKR. The purpose of this consortium is to pool third-party capital to help NVIDIA's smaller and medium-sized customers purchase chips and build AI infrastructure at lower financing costs. NVIDIA itself may provide endorsement for up to 25% of the value of the chips.

SpaceX This financing round is another significant transaction in this wave of AI infrastructure financing.