SpaceX set to raise up to USD25b in debut bonds: Bloomberg
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The news: SpaceX drew about USD89 billion of demand for its debut US bond sale, as it looks to raise up to USD25 billion in five parts, Bloomberg reported citing unnamed sources.
According to the report, Elon Musk’s rocket, satellite and AI conglomerate is raising between USD20 billion and USD25 billion from the five-tranche offering, with the strongest demand for the shortest-dated and least risky tranche.
The context: The skew, and the relatively wide premium SpaceX is paying over Treasuries, likely reflect concerns about its cashflow, the outlet said.
According to S&P Global Ratings, which grades SpaceX at BBB (one notch below Moody’s Baa1) SpaceX will likely keep burning cash through 2030, with the burn rate rising sharply next year.
“The equity market owns the upside, bondholders don’t,” Grant Nachman, founder and chief investment officer of Shorecliff Asset Management, told Bloomberg. “So you have to get paid for the risk.”
According to the report, the 10-year notes were offered at 1.4 percentage points more than Treasuries and the longest-dated 2056 bonds at about 1.75 percentage points above. The report does not disclose the pricing for the shortest-dated five-year tranche, which drew the strongest demand.
The bond debut follows a record USD86 billion IPO in mid-June. Proceeds will refinance a bridge loan and fund corporate expenses.
SpaceX shares had fallen below their debut price (USD150) on Tuesday in New York (Wednesday AEST) before rebounding to trade 4.6% higher at USD161.72 each in mid-afternoon trading.
The source: Bloomberg
