SpaceX agrees to US$40 billion chip-financing deal with Apollo

SpaceX signed a roughly US$40 billion equipment-finance lease with Apollo Global Management Inc. to pay for the chips needed to fuel its artificial intelligence ambitions.

The fixed-rate that the company will pay will be determined at pricing, which hasn’t yet occurred, SpaceX said in a filing Monday. The deal is expected to close before year-end, and the leases are expected to start in the first half of next year.

Elon Musk touted the deal to help finance purchases of Nvidia Corp.’s graphics processing units in a post on X over the weekend.

“This lease diversifies our funding sources and addresses a notable portion of the funding required to deliver on our growth plans,” SpaceX said in a statement Monday, adding that it’s seeing “less than one year payback periods” on its artificial intelligence investments.

The agreement comes on the heels of a tumultuous week for AI companies in debt markets as concern mounted over the industry’s rapid spending, and limited profits so far to show for it. With investors demanding increasingly large premiums to finance the AI build-out, the volatility roiled pricing discussions over the SpaceX debt, which is being structured as private bonds to be issued by an off-balance sheet entity.

Much of the investor angst has been focused on the so-called neoclouds, which sell high-end computing power to technology companies. Musk has sought to differentiate his company from those businesses, pointing to SpaceX’s revenue from its Starlink business and rocket launches.

SpaceX, which is rated investment-grade by the three largest credit graders, has seen the price of its own debt tumble in recent weeks. Credit-default swaps tied to the company, which are used to insure against losses on its debt, surged last week to a record 266 basis points at the close of trading Friday, a level more typical of a junk-rated borrower. That concern eased slightly in early trading on Monday, with SpaceX swaps trading around 261 basis points, ICE Data Services prices show.

Goldman Sachs Group Inc. served as sole structuring agent on the deal, according to the statement. Funds and accounts managed by BlackRock Inc., Goldman Sachs Asset Management, and capital accounts advised by KKR & Co. also made anchor commitments.