Australian investors are keenly observing the impending bond issue from space exploration giant SpaceX, anticipated to be a colossal US$25 billion. This follows a significant week where an investor acquired US$555 million (A$791 million) of Nvidia debt. SpaceX, known for its ambition and innovation, is expected to debut its public debt with a solid BBB+ rating, positioning it as an exceptionally liquid investment, similar to Nvidia’s AA-rated obligations.
SpaceX develops and manufactures advanced rockets and spacecraft, aiming to revolutionise space transport. Its Starlink division is building a global internet service through a vast constellation of low-Earth orbit satellites, becoming a crucial player in global connectivity. This integrated approach, which includes reusable rockets and vertical integration, has transformed the economics of satellite internet, creating a planetary utility that serves households, airlines, ships, and emergency services. The company’s unique architecture reinforces its strategic relevance by building critical infrastructure for both private and public spheres.
From a credit perspective, the paramount factor for potential debt investors is price. An investor noted their significant focus on liquidity and tradeability, having a long-standing appreciation for the optionality these provide. While acknowledging SpaceX’s significant optionality and upside on the equity side, the debt decision hinges purely on the offering’s terms. The investor expressed readiness to fund the inaugural rated public bond issue if it comes with an appropriate concession, otherwise, they would not participate. This disciplined approach underscores the importance of prudent pricing for debt investors with limited upside and non-trivial downside.
