SpaceX to Issue $20 Billion in Corporate Bonds, Accelerating AI Infrastructure Business

Computing Supply Contract Signed with Reflection AI

Securing Long-Term Revenue Stream in AI Infrastructure Business

SpaceX Shares Down 12% Intraday

Elon Musk's SpaceX is set to enter the corporate bond market for large-scale fundraising immediately after its initial public offering (IPO). At the same time, the company is expanding its presence as an AI infrastructure provider by signing multi-billion-dollar computing contracts with artificial intelligence (AI) startups.

According to the Wall Street Journal (WSJ) on June 22 (local time), SpaceX plans to raise at least 20 billion dollars (approximately 31 trillion won) through its first-ever corporate bond issuance. On this day, SpaceX held a call with investors, and the pricing and issuance of the bonds are expected to take place as early as June 23.

This bond issuance comes immediately after SpaceX raised more than 85 billion dollars (approximately 131 trillion won) through its IPO. According to the WSJ, the funds raised will first be used to repay the bridge loan the company received from banks earlier this year. Additional proceeds will be used for general corporate purposes.

SpaceX has received an 'investment grade' rating from major credit rating agencies. Moody's assigned SpaceX a 'Baa1' rating, and S&P Global gave it a 'BBB' rating, according to the WSJ. This marks a shift in perception, as SpaceX is now being evaluated not only as a high-risk growth company but also as a major issuer of high-quality corporate bonds.

However, credit rating agencies view SpaceX’s AI business as its greatest uncertainty. In a recent report, S&P described SpaceX’s rocket business as "solid" and assessed its satellite internet business as having "the necessary capabilities."

In contrast, S&P pointed out that the AI business is the riskiest among the three business segments, due to massive initial investments and an unclear path to monetization. The agency also forecast that SpaceX’s free cash flow could remain negative until 2029 due to the company's high capital expenditures.

AI Startup 'Reflection AI' Signs Computing Supply Agreement

Meanwhile, Bloomberg News reported that SpaceX has signed a multi-billion-dollar computing resource supply contract with AI startup Reflection AI.

This deal is part of SpaceX’s strategy to expand its business of selling data center computing capacity to AI companies. Bloomberg also reported that, in the weeks leading up to its Wall Street debut, SpaceX signed data center computing capacity leasing agreements with Google and Anthropic as well.

Starting in July and running through 2029, Reflection AI will pay SpaceX’s AI division, SpaceX AI, 150 million dollars (about 230.7 billion won) per month to use hardware at SpaceX’s 'Colossus 2' data center in Memphis, Tennessee. Both companies have the right to terminate the contract with 90 days’ notice.

Reflection AI is an open AI model developer founded by two former Google DeepMind researchers. Investors include Nvidia, among others, and the company is reportedly in discussions to raise 2.5 billion dollars (about 4 trillion won) at a valuation of 25 billion dollars (about 39 trillion won).

For SpaceX, the AI computing contracts offer the advantage of creating a new long-term revenue source. Bloomberg noted that although Musk has struggled to keep pace in the AI development race, SpaceX is building a business of selling computing capacity to AI firms by securing large-scale semiconductor and data center infrastructure.

The challenge, however, is the enormous investment burden. According to the WSJ, S&P projects that SpaceX’s high capital expenditures could keep its free cash flow negative through 2029, and as a result, the company will likely need to raise additional funds through stock and debt issuance. SpaceX’s immediate move into the bond market following its IPO demonstrates this funding need.

Meanwhile, SpaceX shares plunged more than 10% intraday, marking the steepest decline since listing. Amid increased pressure for profit-taking after the post-IPO rally, the plan for a minimum 20 billion dollar corporate bond issuance and the burden of AI infrastructure investment appear to have heightened investor caution.

This content was produced with the assistance of AI translation services.