SpaceX: first debt test disappoints the market
The $25 billion bonds are losing ground on the secondary market just a few days after the placement
First a record on the stock market, then a debut on the bond market raising $25 billion. Now, however, the first test of the market for SpaceX’s debt is showing less encouraging signs. Just a few days after the placement, the bonds issued by the space group led by Elon Musk are already losing value on the secondary market, with spreads widening at a rate that traders describe as unusually rapid for an issue of this size.
According to Bloomberg, bonds maturing in 2056 are trading at up to 28 basis points above their issue price. To put it more simply: the market is demanding a higher yield to hold those securities. And this is a sign that risk perception has risen slightly compared with a few days ago. The theoretical losses for investors, calculated relative to US Treasuries, already amount to around $305 million.
This trend appears unusual, particularly when compared with other recent large-scale bond issues in the technology sector. Nvidia’s bonds placed this month, for example, saw spreads widen by around 8 basis points. And Alphabet’s bonds, issued in February, actually tightened in the weeks that followed. In the case of SpaceX, however, the deterioration was much more pronounced, particularly for longer maturities.
But what does all this mean? One possible explanation might lie in the composition of the investor base. Several market participants, in fact, believe that a significant portion of the demand came from hedge funds keen to resell the securities quickly after the placement, rather than from institutional investors intent on holding them in their portfolios until maturity. The increase in sales on the secondary market would therefore have exerted immediate pressure on prices.
Added to this is the company’s unique profile. Despite having achieved an investment-grade rating, Musk’s giant continues to display characteristics that are unusual for an issuer with such a rating: analysts still forecast years of negative cash flows, and the major rating agencies cite the company’s heavy reliance on Elon Musk as one of the most significant risk factors.
