SpaceX Bonds Sold Off Days After Issuance, Spreads Approaching Junk-Grade Levels
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SpaceX's $25 billion bond deal soured within days — 10-year spreads widened past 1.6 percentage points, approaching junk-rated levels, as investors question whether this trillion-dollar company can actually service its debt.
Why did a brand-new bond drop so fast?
SpaceX completed a $25 billion bond offering on Tuesday. By Friday, prices had fallen sharply.
The 10-year tranche's yield rose to nearly 6%, with the spread over Treasuries widening to above 1.6 percentage points — 0.2 points wider than at issuance.
This means → buyers who subscribed just days ago are already sitting on paper losses. The market's appetite was weaker than underwriters assumed.
It has an investment-grade rating — so why is it trading like junk?
Major rating agencies gave SpaceX an investment-grade rating (BBB — the lowest investment-grade tier), yet its trading spread has drifted toward junk territory.
In plain terms = the agencies said "safe enough to hold," but the market is pricing it closer to "questionable."
The numbers: BBB-rated U.S. corporate bonds trade at a spread of roughly 0.95 percentage points. BB-rated issuers — the entry point for junk — sit at 1.67 points. SpaceX's 1.6 points is nearly there.
Why is the pressure worse on longer-dated bonds?
Selling concentrated in the longest maturities: the 2046 bond spread widened from 1.65 at issue to 1.93 percentage points; the 2056 bond moved from 1.75 to 2.01.
This means → investors can tolerate SpaceX's near-term ability to pay, but they have serious doubts about its capacity to service debt 20 to 30 years out.
PGIM portfolio manager Michael Campion noted that investment-grade credit analysis centres on whether a company can repay — institutions lend against actual cash flow, not projections.
Can the fundamentals support a valuation this high?
Financials: SpaceX posted a $4.9 billion net loss in 2025 on revenue of $18.7 billion — still burning cash at scale.
It completed an IPO this month at a $1.78 trillion valuation, raising $86 billion. Post-listing, the stock swung wildly — market cap briefly neared $3 trillion, then pulled back to $2 trillion.
This reflects a valuation built on the expectation that AI revenue will surge over coming years. Bond investors, however, want cash flow — not a growth narrative.
What are outside institutions saying?
Allianz chief investment officer Ludovic Subran called this a clear signal that markets have entered "bubble territory", speaking at the FT Global Insurance Summit.
His point: bond investors care about coupons — the regular interest payments — not the vision.
London Business School professor James Dow added that SpaceX is heavily dependent on Musk with no succession plan, compounded by weak governance — tolerable risks for short-term equity holders, but material concerns for bondholders locked in for 20 to 30 years.
Content is for reference only, not financial advice.