SpaceX Bonds Lose $360M at Debut as AI Financing Wave Pushes Investment-Grade Credit Spreads to 0.79%
N.R. Finch
U.S. investment-grade tech bond spreads widened to 0.79 percentage points this month. SpaceX's $25 billion debut lost roughly $360 million on paper within days — the bond market is repricing the AI capital-expenditure wave.
Tech giants are raising record sums — why is the bond market pushing back?
U.S. investment-grade tech bond spreads hit 0.79 percentage points this month, up from 0.74 at the end of May.
SpaceX completed a $25 billion bond offering this week, but selling pressure exceeded dealer expectations — paper losses reached roughly $360 million by Friday afternoon.
Alphabet's bonds also weakened after its $85 billion equity sale, with some investors linking the move to concerns over the Google parent's AI spending scale.
This means → bond investors are not objecting to AI itself; they are demanding higher compensation for the sheer pace of spending.
Shouldn't equity raises help bondholders? Why are they reading it as bad news?
Conventional logic says equity issuance strengthens the balance sheet and gives creditors a thicker cushion — but bond investors read it the opposite way this time.
L&G fixed-income head Anthony Woodside: "Equity isn't replacing debt — it's supplementing it." In plain terms = companies are selling stock *and* bonds together, making the total funding burden larger, not smaller.
Columbia Threadneedle IG credit head Tom Murphy added: "This tells us their capex could keep rising."
How big is the AI spending wave — and how much more borrowing is coming?
JPMorgan's latest forecast: total AI and data-center spending will reach $5.5 trillion by 2030, up roughly $400 billion from its November estimate.
Data-center borrowing in the investment-grade bond market is now projected at $2.1 trillion over five years — a 40% increase from the prior $1.5 trillion estimate.
This means → the bond market must absorb massive ongoing supply; spread widening may be a trend, not a one-off event.
Is anyone on the other side of this trade?
Vanguard IG credit co-head Arvind Narayanan called tech equity sales "a very positive signal" for bondholders.
His logic: management willing to dilute shareholders signals genuine confidence in AI plans.
But Robert W. Baird credit strategist Jeff Schrom countered: "They can flood the market with debt, but the cost is paying ever-wider spreads." Asset managers have begun demanding higher yield premiums, and issuers are turning to overseas markets to avoid overwhelming U.S. buyers.
What is the deepest risk here?
SpaceX issued 20-year and 30-year bonds. Nvidia sold $25 billion across multiple maturities. Alphabet issued a 100-year sterling bond in February.
In plain terms = buying these bonds is a bet that AI technology will not become obsolete for decades — bondholders' best outcome is principal plus interest, but their worst-case loss is as severe as an equity holder's.
This reflects a fundamental mismatch: bondholders bear near-equity duration risk without equity-level upside.
Case in point: SpaceX holds $100.8 billion in cash, but S&P Global Ratings projects it will burn through roughly $113 billion by end of next year and another $90 billion by 2028 — further debt and equity raises are all but certain.
Content is for reference only, not financial advice.