SpaceX's $40 billion Nvidia chip debt deal gets pricier as AI jitters spread

SpaceX is finalizing a $40 billion debt raise led by Apollo and Goldman Sachs, and it is coming at sharply higher interest rates than the company paid the last time it tapped bondholders, Semafor reported on October 22. The money is meant to buy Nvidia's Vera Rubin AI computing platform, in what Seoul Economic Daily says would be the largest debt deal ever for AI infrastructure.

Forty billion dollars. For chips. Please sit up straight.

The deal, and what it costs

The talks surfaced earlier this month, when Seoul Economic Daily reported that SpaceX was in discussions with banks and investors for the money, about 54 trillion won. Now the pricing is coming into view.

According to Semafor, citing people familiar with the deal, the lowest-rated portion is expected to carry an interest rate of about 8.3%. A safer piece, backed by some of SpaceX's chips, is likely to price next week around 7.75%. That is more than 1 percentage point above where SpaceX's current bonds trade. Semafor ties that gap to an AI-loan market that has pulled back sharply over the past few weeks.

Reuters reported that SpaceX also held talks with asset manager PIMCO alongside Apollo.

Semafor calls the higher rates "a sign of growing jitters in the AI world." I would call it a very glamorous invoice.

A market that is getting nervous

The context is a company that borrowed big in June and is now back for more. SpaceX's 5.875% notes due 2036 were issued that month as part of a $25 billion debt deal, at a spread of 140 basis points.

By early October, according to Trace data cited by Seoul Economic Daily, that spread had widened 5 basis points on the day to 193. Five-year credit default swaps on SpaceX debt rose as much as 16.7 basis points at one point to about 197.6, which ICE Data Services figures put at an all-time high on that gauge for the company.

SpaceX is not suffering alone. Meta Platforms' 6.45% notes due 2066 also widened 5 basis points, trading at 189. Semafor says SpaceX's existing bonds weakened in recent days as strong earnings were overshadowed by massive spending plans and concerns about the debt load, plus broader AI fears fueled by CoreWeave's debt selloff.

And the line of borrowers keeps growing:

• The Wall Street Journal reported that Broadcom is in talks with firms including Apollo and Blackstone on financing that could exceed $50 billion to back OpenAI custom chip production capacity.
• The Financial Times reported earlier that Broadcom guaranteed $42 billion of a $60 billion loan Anthropic is taking out against lease payments for Google's tensor processing units.
• Morgan Stanley estimates AI infrastructure will need $1.5 trillion in external financing by 2028, even as lenders and investors grow more cautious.

What it means

The appetite is still there. The price is the new part. That is a market saying yes, but with a clipboard.

There is also a political footnote that only this desk would find thrilling: Donald Trump purchased $5 million in SpaceX bonds in August, according to Semafor. Make of that what you will. I am simply delighted to report that the room is full of very important people.

The skeptics are loud too. Joachim Klement, head of market strategy at Panmure Liberum, said the AI bubble will burst within two years, and forecast that the S&P 500 will fall more than 36% from current levels by the end of next year. Nassim Taleb called investing in a company simply because it is an AI innovator a trap. Those are warnings and forecasts, not established outcomes. They appeared in Seoul Economic Daily's October 8 report.

What to watch

The obvious date is next week, when the safer tranche is expected to price. Semafor's 7.75% and 8.3% figures come from people familiar with the deal, so the final terms are the thing to check.

The open questions are real ones:

• Which banks and institutions beyond Apollo, Goldman Sachs and PIMCO will take part in the bank loan portion?
• Which GPU models, and how many, will be pledged as collateral for the secured tranche? The reporting does not say.
• SpaceX is currently considering a merger with Tesla, per Semafor. The reporting does not explain how that would be structured or what it would mean for the newly issued debt.

SpaceX still has the demand and the biggest names in private credit at the table. What it no longer has is a free pass. Watch the pricing next week.