Pacific Investment Management Co. (Pimco) purchased a $4 billion portion of SpaceX's roughly $40 billion equipment-financing package, according to people familiar with the matter. The deal, led by Apollo Global Management Inc., will fund purchases of Nvidia Corp. graphics processing units and related equipment to advance Elon Musk's artificial intelligence ambitions. Pimco is buying part of the A2 tranche, which sits between more junior and senior slices of the debt package. The debt will be issued as 144a bonds, privately placed securities tradable among institutional buyers.
Pimco has emerged as a key buyer of debt fueling the AI boom, previously anchoring financing for Oracle Corp.'s data center campus in Michigan and backing Meta's project in Louisiana. However, the Newport Beach-based asset manager has cautioned about industry excesses.
Debt markets have recently soured on AI companies as rapid spending outstrips profitability. This volatility roiled pricing talks for the SpaceX debt, with subordinated portions previously discussed in the mid-8% yield range. Musk has sought to differentiate SpaceX from "neocloud" providers by highlighting revenue from Starlink and rocket launches.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing