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

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The client was not given the opportunity to put restrictions on the content or review it prior to publication. by BDCSpaceX agrees to US$40 billion chip-financing deal with ApolloThe agreement comes on the heels of a tumultuous week for AI companies in debt marketsAuthor of the article:SpaceX, which is rated investment-grade by the three largest credit graders, has seen the price of its own debt tumble in recent weeks. Photo by Mario Tama/Getty ImagesSpaceX 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.THIS CONTENT IS RESERVED FOR SUBSCRIBERS ONLYSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman, and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.SUBSCRIBE TO UNLOCK MORE ARTICLESSubscribe now to read the latest news in your city and across Canada.Exclusive articles from Barbara Shecter, Joe O'Connor, Gabriel Friedman and others.Daily content from Financial Times, the world's leading global business publication.Unlimited online access to read articles from Financial Post, National Post and 15 news sites across Canada with one account.National Post ePaper, an electronic replica of the print edition to view on any device, share and comment on.Daily puzzles, including the New York Times Crossword.REGISTER / SIGN IN TO UNLOCK MORE ARTICLESCreate an account or sign in to continue with your reading experience.Access articles from across Canada with one account.Share your thoughts and join the conversation in the comments.Enjoy additional articles per month.Get email updates from your favourite authors.THIS ARTICLE IS FREE TO READ REGISTER TO UNLOCK.Create an account or sign in to continue with your reading experience.Access articles from across Canada with one accountShare your thoughts and join the conversation in the commentsEnjoy additional articles per monthGet email updates from your favourite authorsSign In or Create an AccountThe 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.This advertisement has not loaded yet, but your article continues below.Elon Musk touted the deal to help finance purchases of Nvidia Corp.’s graphics processing units in a post on X over the weekend.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“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.This advertisement has not loaded yet, but your article continues below.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.We apologize, but this video has failed to load.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. Read more about cookies here. By continuing to use our site, you agree to our Terms of Use and Privacy Policy.