Elon Musk's Latest Side Quest: The Bond Market

• SpaceX's market push continued on Monday with the announcement of a $20 billion debt-financing deal.
• Stock investors are wondering why the $75 billion raised in SpaceX's recent IPO isn't enough.
• Answered below are four main pressing questions in the wake of SpaceX's debt deal.

Stop me if you've heard this before: SpaceX keeps finding new ways to send ripples through markets of all types.

It was the bond market's turn on Monday, when the Elon Musk-led rockets-and-AI juggernaut officially announced it will raise $20 billion of debt financing. Those proceeds will come in addition to the $100 billion of cash the company currently has on hand. (Remember mere weeks ago when it minted $75 billion in history's biggest-ever IPO?)

The whole ordeal raises a handful of questions:

SpaceX already has $100 billion in cash. Why does it need more right now?

The best and most straightforward answer is: The proceeds will be used to refinance a roughly $20 billion bridge loan SpaceX got from banks earlier this year.

This is relatively common practice for companies that have recently completed an acquisition or another transaction, such as an IPO. Once a post-offering balance sheet is finalized, firms can often get better terms on debt.

A second reason is, when it comes to AI capex spending, a company can never have enough money to burn. Through its ties to xAI, Musk's broader business empire is pursuing capital-intensive ambitions that will require massive upfront investment, much like other AI titans. It might as well take advantage of its strong debt profile. Speaking of which…

What's the significance of SpaceX's debt rating?

SpaceX's debut fixed-income offering came with a BBB rating from S&P, and a Baa1 from Moody's, both investment grade. This is notable for Musk, who — with Tesla — contended with a junk rating from both agencies for years before moving up. But Tesla, at Baa3, is still rated lower than SpaceX by Moody's.

Given how much SpaceX is expected to ultimately raise in the debt market — a figure that Oppenheimer analysts put at $400 billion by 2031 — an investment-grade rating will end up being a significant source of capital savings. But will there be enough buying power to go around? Let's explore…

How has demand been for other AI giants, like hyperscalers?

So far, so good. The likes of Amazon and Alphabet haven't been shy about tapping debt markets. In total, JPMorgan finds that $300 billion of debt tied to AI has been raised since November.

And traders have responded. Nvidia's recent $25 billion bond sale was more than three times oversubscribed by investors clamoring for a piece.

How are stock investors reacting?

This is the tough part. Investors are asking the same question answered above: Why isn't the $75 billion raised in the IPO enough for now?

It's also been relatively common for the shares of big AI spenders to fall on plans of even more spending. Traders can't help but react to the sticker shock they feel when another massive stack of money gets earmarked for capex.

There's also the fact that SpaceX stock — buoyed by the relentless power of retail investors — was still up 37% after its IPO, through last week's close. In other words, it still had room to fall.

After a 16% drop on Monday, it's now up just 15% from its offering price of $135.