Written by: 鲍奕龙

Hot on the heels of its record IPO, SpaceX's massive $25 billion bond issuance was met with heavy selling in the secondary market. The aggressive financing pace of the chronically loss-making rocket and artificial intelligence company quickly backfired on investor confidence, causing its bond spreads to widen sharply, pushing them close to speculative-grade (i.e., "junk") levels.

As of Friday, SpaceX corporate bonds went from "red-hot demand" on the books to a full-blown rout within just 48 hours of pricing.

Selling pressure across SpaceX's various bond maturities resulted in cumulative book losses of about $400 million compared to U.S. Treasuries, with the spread tightening achieved by underwriters during the subscription phase completely erased by the plunge in long-dated bonds.

According to data from MarketAxess, the yield on SpaceX's 10-year bonds rose to nearly 6%, with the spread over U.S. Treasuries widening to more than 1.6 percentage points. Spreads on its long-dated bonds maturing in 2046 and 2056 surged to 1.93 and 2.01 percentage points, respectively.

According to Ice Data Services, the market currently prices the average spread on BB-rated "junk bonds" at 1.67 percentage points, meaning that SpaceX, which holds Baa1/BBB investment-grade ratings, is now trading significantly worse than some junk-rated issuers.

The scale and speed of the sell-off stunned fixed-income traders. Market participants noted that among recent mega-bond offerings, there is virtually no precedent for spreads widening this rapidly and by this much.

"Perfect Storm" Batters the Secondary Market

SpaceX's initial book data for this bond offering had temporarily masked the underlying risks.

According to Bloomberg, the deal initially drew nearly $90 billion in orders, representing almost 4x oversubscription, and the offering size was accordingly increased from $20 billion to $25 billion.

However, traders revealed that this frenzy was primarily driven by fast money seeking short-term arbitrage, rather than traditional buy-and-hold investors. When these funds tried to quickly take profits in the secondary market, selling pressure surged.

Tony Trzcinka, portfolio manager at Impax Asset Management, said the market had already anticipated that SpaceX's spreads would widen, but the current magnitude amounts to a "perfect storm."

He pointed out that this stems from the massive evaporation of the company's market value since its IPO, technical selling pressure from the enlarged deal size, and the fact that investors are still struggling to price its unique risk profile.

For comparison, Nvidia, which recently completed a $25 billion bond sale, saw its long-dated bond spreads widen by only 11 to 12 basis points, while Alphabet's long-dated bond spreads actually tightened.

In addition, SpaceX's credit default swaps (CDS) also widened sharply after the trade opened, further confirming the market's defensive stance on its credit profile.

Cash Flow and Governance Risks Spark Direct Concerns

Stock and bond investors have fundamentally different frameworks for evaluating SpaceX.

The company raised $86 billion through its IPO earlier this month, and its valuation briefly touched nearly $3 trillion before pulling back to $2 trillion, a valuation largely built on expectations that its AI revenue will surge in the future.

However, for creditors, the core fact is that SpaceX posted revenue of $18.7 billion in 2025 while running a net loss of $4.9 billion. Michael Campion, portfolio manager at PGIM, said:

In the investment-grade bond market, we care about whether a company can repay its debt, and we are accustomed to lending based on actual cash flow rather than expectations.

Ludovic Subran, chief investment officer at Allianz, also put it bluntly:

Bond investors are different from stock investors. Stock investors can go to Mars with you, but bond investors will only ask, 'Where's my coupon?'

Moreover, the extreme dependence on Elon Musk's personal leadership has also become a core concern for rating agencies and investors. Fitch Ratings views this as a "key rating constraint."

James Dow, a professor at London Business School, pointed out that SpaceX is currently heavily dependent on Musk, lacks a succession plan, and has unusually weak corporate governance, which greatly diminishes the appeal of its long-term debt.

Tech Giants' Bond Issuance Wave Nears "Bubble" Territory

The cold reception SpaceX received is not an isolated incident but exposes the systemic risks of the current debt expansion among tech giants.

As tech companies race to raise huge amounts of capital to fund artificial intelligence projects, investors are confronting a massive supply shock in bonds.

According to Morgan Stanley, AI-related debt issuance so far this year has reached $236 billion, a year-on-year increase of 357%, and is expected to double to $570 billion by year-end.

The borrowing binge is rapidly driving up leverage in the sector. Data shows that the total leverage ratio of mega-cap tech companies doubled in just over two quarters, surging from 0.9x to 1.8x, already exceeding the total leverage of the entire energy sector.

This massive supply is overwhelming the market structure. Bloomberg calculations show that as of Wednesday, U.S. investment-grade bond supply in June had already hit $180 billion, a record high.

The supply glut has begun to weigh on broader credit spreads. Morgan Stanley noted that spreads for mega-issuers are widening across the board, and bond performance from Oracle and Meta both confirm this trend.

Mark Dowding, chief investment officer for fixed income at RBC BlueBay Asset Management, wrote in a report that bondholders have clearly concluded that as this loss-making company finances its path to future profitability, there are likely to be even more large debt offerings ahead.

Analysts believe that if this pace of debt expansion continues, credit spreads will ultimately blow out further, imposing a material constraint on the capital expenditure cycle of tech companies.