SpaceX (SPCX.US) equity bonds are double hot and cold! Aggressive expansion plans push up debt risk premium bonds and widen credit spreads by 9 basis points

The Zhitong Finance App learned that although SpaceX (SPCX.US)'s third-quarter results greatly exceeded Wall Street expectations, driving the company's stock price to rise more than 12% on Wednesday, its bonds were sold off by investors. As SpaceX announced that it will continue to invest heavily in artificial intelligence (AI) computing power, satellite broadband, and mobile communication services, the bond market is beginning to worry that the company may further expand its loan scale in the future, thereby increasing its financial burden.

The risk premium for SpaceX bonds rose markedly on Wednesday, continuing the upward trend in credit risk reflected in its credit derivatives market earlier this week. In the US stock trading session, SpaceX's coupon interest rate was 6.6%, and the credit spread on bonds due in 2046 increased by 9 basis points to 264 basis points. This means that investors are requesting a further increase in the additional risk compensation they receive from holding the company's bonds.

Meanwhile, according to ICE Data Services data, the SpaceX five-year credit default swap (CDS) spread once widened 0.8 basis points to about 232.6 basis points, reversing the previous narrowing trend.

Credit default swaps are often viewed as an important market indicator for measuring a company's credit risk. The widening spread means an increase in the cost of investors purchasing protection against the risk of debt default. It also reflects increased market concerns about companies' future solvency and financing pressure.

Notably, SpaceX's CDS spread continued to rise for most of October and hit a monthly high several times, indicating that bond investors' interest in its capital expenditure plans is heating up.

However, in stark contrast to the cautious attitude of the bond market, SpaceX stock investors reacted positively to the latest earnings report.

According to earnings reports released by SpaceX on Tuesday, the company achieved net profit of 4.4 billion US dollars in the third quarter ending September 30, far higher than Wall Street's forecast of 1.88 billion US dollars. At the same time, revenue increased sharply by 161% year over year, which also exceeded analysts' expectations. Strong profit and revenue growth boosted SpaceX's stock price by 12.44% on Wednesday. Currently, the company's market value exceeds 2 trillion US dollars, and it has become one of the most watched AI infrastructure investment targets in the global capital market.

However, despite strong performance, the capital expenditure signals released by SpaceX management during the earnings call triggered another interpretation of the bond market. SpaceX Chief Financial Officer Bret Johnsen said on Tuesday that the company is actively investing in three areas that it believes can generate the highest long-term returns, including the AI computing power business of its Super Intelligence (Super Intelligence) division, and Starlink satellite broadband and mobile communications services.

Johnsen stressed that the company plans to maintain an investment-grade credit rating while speeding up investment, but management's positive statement on the scale of future investment still raises market concerns that SpaceX may further increase its debt.

In fact, SpaceX has previously raised a large amount of capital through the bond market. In June of this year, the company raised 25 billion US dollars through multiple batch bond issuance, which became an important source of capital to support its business expansion.

Furthermore, the media reported earlier this month that SpaceX is in talks with banks and investors to seek to raise about 40 billion US dollars to purchase Nvidia (NVDA.US) AI chips. This means that as SpaceX continues to expand AI computing infrastructure construction, its future financing needs may increase further.

The company is currently in discussions with several debt capital providers to support its rapidly growing business, Johnsen said during an earnings call on Tuesday. He pointed out that SpaceX still has a variety of debt financing channels available and is evaluating how to support the company's future development through these funding sources.

For bond investors, the question is not whether SpaceX's current profit performance is strong, but whether the company's huge future capital expenditure requirements will cause a rapid rise in debt size and further affect its credit status.

Nor is this concern unique to SpaceX; it is spreading throughout the large technology corporate bond market. As global technology companies continue to expand investment in AI infrastructure, the market is expected to usher in a new round of large-scale corporate bond issuance in the future.

Data shows that since this year, global companies have raised more than 450 billion US dollars in debt financing to support investments related to artificial intelligence, while the amount of related financing for the whole of last year was about 200 billion US dollars. This means that since this year, the scale of AI-related debt financing has more than doubled that of last year.

Meanwhile, as investors expect technology companies to further increase their financing efforts after the release of the third quarter earnings report, the credit risk indicators of some large technology companies have risen to new highs this week.

As supply in the bond market continues to increase, investors are beginning to demand higher risk premiums to cover the risks that may be brought about by rising demand for financing and increased debt burdens in the future.

For SpaceX, the fragmentation of the stock and bond markets reflects that investors are evaluating its rapid expansion strategy from different perspectives. Stock investors pay more attention to the revenue and profit potential brought about by the rapid growth of the AI computing power business, while bond investors pay more attention to the scale of capital expenditure, future financing needs, and whether the company can maintain an investment-grade credit rating.