SpaceX seeks $40bn in financing for Nvidia chip purchase

Investing.com -- SpaceX is pursuing $40 billion in financing to purchase chips from Nvidia Corp as the aerospace and artificial intelligence company expands its use of the chipmaker's technology. The company plans to raise approximately $10 billion through bank loans and $30 billion in investment-grade debt to fund the chip order, according to people familiar with the matter.

Private capital firm Apollo Global Management Inc is expected to lead the financing effort and help distribute the debt to investors. Bond investment firm Pimco was among a small group of lenders in discussions to fund the deal, the people said. The transaction is expected to close in 2027.

SpaceX's BBB credit rating, the second-lowest investment-grade ranking, would allow insurance and pension funds to purchase the company's debt. These types of funds typically take more limited positions in junk-rated securities.

Apollo, Pimco, SpaceX and Nvidia did not immediately respond to requests for comment.

The deal would strengthen the relationship between SpaceX and Nvidia after Elon Musk committed to using the chipmaker's technology for his AI projects.

"We've decided to build exclusively on Nvidia because we think the Vera Rubin architecture is the best architecture," Musk said during SpaceX's earnings call in August, referring to Nvidia's AI platform. "We think it's the best AI computer, and we greatly value our close co-operation and partnership on many levels with Nvidia."

SpaceX received an investment-grade rating after its $86 billion initial public offering in June. The company sold $25 billion in high-grade bonds less than two weeks later. The bonds declined in the following days due to concerns over mounting debt and capital expenditure.

SpaceX bonds maturing in 2056 are trading at about 85 cents on the dollar, with a yield approximately 2.27 percentage points above US Treasuries, according to MarketAxess data.

Apollo has led multibillion-dollar financing transactions for companies including Intel Corp and Bayer AG as part of its $800 billion credit business. The firm led a $35 billion chip financing deal in June for processors made by Broadcom Inc, which was the largest private-credit transaction at that time.

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