Elon Musk’s SpaceX is seeking to raise $40bn to purchase Nvidia chips as the AI and rocket group amplifies its bet on the chipmaker’s advanced technology.
The company is seeking to raise about $10bn in bank loans and $30bn in investment-grade debt to fund its blockbuster chip order, according to people familiar with the matter.
Private capital group Apollo is expected to lead the financing effort and help sell the debt to a broad base of investors. Bond group Pimco was among a small group of lenders in talks to fund the deal, the people said. The transaction is expected to close in 2027.
SpaceX’s financing plans underscore the vast sums that are being raised to pay for investments in data centres, chips and other infrastructure underpinning AI.
Insurance and pension funds would be able to buy SpaceX’s debt due to its BBB credit rating, the second-lowest investment-grade ranking. Such funds take much more limited positions in junk-rated notes.
Apollo and Pimco declined to comment. SpaceX and Nvidia did not immediately respond to requests for comment.
The deal would strengthen ties between SpaceX and Nvidia, after Musk vowed to double down on the group’s technology for his AI initiatives. It would also mark a win for Nvidia, as it contends with growing competition from chipmakers aiming to challenge its dominance in advanced semiconductors.
“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 cutting-edge 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 secured an investment-grade rating shortly after its $86bn initial public offering in June. It sold $25bn in high-grade bonds less than two weeks later. However, the bonds sold off in the following days due to concerns over its mounting debt and heavy capital expenditure.
Its bonds maturing in 2056 are trading at about 85 cents on the dollar, with a yield at about 2.27 percentage points above US Treasuries, similar to the level of junk bonds, according to MarketAxess data.
Musk’s limited financial disclosures have kept some investors away from SpaceX debt in the past.
Investors whom SpaceX has previously approached about financing its multibillion-dollar chip purchase said they only received a short two-page deal memo with pictures of outer space and an arrow pointing out that the company was going to build data centres “somewhere in the universe”.
“How are we supposed to take that to the IC?” one of the people said, referring to the in-house investment committee that approves transactions.
Apollo has made lending to high-grade companies a pillar of its $800bn credit business, leading multibillion-dollar financing transactions for groups such as Intel and Bayer. Its life insurance and annuities affiliate Athene typically buys a large portion of these offerings.
Apollo also led a $35bn chip financing deal in June for processors made by Nvidia rival Broadcom, marking the largest private-credit transaction at the time.
In August, Nvidia announced that it was working with some of the largest firms on Wall Street on a $500bn funding platform, signing memorandums of understanding with Apollo, BlackRock, Blackstone, Brookfield, Goldman Sachs and KKR.
The consortium aims to create pools of third-party capital to finance the acquisition of Nvidia’s chips and broader build-out of AI infrastructure at lower borrowing costs for its smaller clients, with Nvidia potentially backstopping up to 25 per cent of the chip value.