And then they say there is no "circular financing" here, or rather an indebted company gets even more into debt so Nvidia can profit.
SpaceX $SPCX wants to borrow $40 billion to buy chips from Nvidia $NVDA.
The financing is to be led by $APO Apollo Global Management. Of the total amount, $10 billion would be bank loans and $30 billion investment-grade bonds. Let's not forget that SpaceX is not exactly famous for its profits.
And why this partnership at all?
Musk announced in August that SpaceX will build its AI projects exclusively on Nvidia's Vera Rubin platform.
Apollo also led the financing of chips from Broadcom $AVGO for $35 billion in June. It is also among the companies with which Nvidia is building a $500 billion platform to finance the purchase of its chips.
However, the bond market for $SPCX is less optimistic.
After the June IPO at $86 billion, the company received a BBB rating and shortly after issued $25 billion in bonds. But those quickly fell in the market due to concerns about rising debt and high investments.
Bonds maturing in 2056 trade at about 85% of face value with a premium of about 2.27 percentage points over US government bonds, which corresponds to junk bond levels. In loose translation, it is almost "junk".