# SpaceX’s debt is riskier, while data centers drive the thesis

Markdown copy of https://realalpha.app/s/spacexs-debt-is-riskier-while-data-centers-drive-the-thesis/ on Real Alpha, the best minutes from long interviews with the people building AI. Cite and link the page, not this copy.

- Speaker: [John Foley](https://realalpha.app/people/john-foley/) · Head of the Lex Column, Financial Times
- Host: [Ed Elson](https://realalpha.app/people/ed-elson/)
- Show: Prof G Markets
- Episode: [SpaceX Raised $111B — It Already Needs More](https://realalpha.app/v/9SAgLMahZm4/), Oct 8, 2026
- Moment: 9:35 to 13:43 of the episode (4 min), playing on https://realalpha.app/s/spacexs-debt-is-riskier-while-data-centers-drive-the-thesis/; the episode from there: https://realalpha.app/v/9SAgLMahZm4/?t=575

## Quote

> “At the moment, the market's **not sending out a distress signal**, but it is saying there's companies getting riskier by the minute.”
> — [John Foley](https://realalpha.app/people/john-foley/) at [11:10](https://realalpha.app/v/9SAgLMahZm4/?t=670) · Prof G Markets

## Takeaways

1. SpaceX’s long-dated bonds trade at about 85 cents on the dollar.
2. A downgrade from investment grade could sharply raise borrowing costs.
3. Starlink is profitable, but data centers are the near-term revenue bet.

## About this segment

John Foley reads rising credit spreads and falling bond prices as signs of growing risk, not yet distress. He says the investment case now hinges on whether SpaceX can build and rent data centers.

From “SpaceX Raised $111B — It Already Needs More”, Oct 8, 2026. [Watch the full episode](https://realalpha.app/v/9SAgLMahZm4/)

## Transcript

Transcribed by machine (Whisper) from the episode’s audio, so a word may be off here and there.

[9:47](https://realalpha.app/v/9SAgLMahZm4/?t=587) just want to point to what's happening to the spacex credit default swaps which rose to 194 basis points on wednesday uh they were trading at 110 basis points in june so essentially what's happened here is the cost of ensuring spacex's debt against default is suddenly getting very expensive and the debt itself is also getting sold off as well so it seems like the the bond markets are starting to tell a kind of a different story which is they are very worried about the debt what do you make of what we're seeing in those markets i think they're a bit worried about the debt so the credit default swaps are as you said those spreads are rising and that's because people look for something they can use to hedge against this all going wrong the bond prices have also fallen more at the long end so the 50-year bonds are trading at something like 85 cents on the dollar

[10:37](https://realalpha.app/v/9SAgLMahZm4/?t=637) the five-year bonds are trading much closer to i think it's like 95 last time i looked and that's not a sign that people are you know desperately worried but it is a sign that they're aware that this company is taking on much more debt now the idea is that its cash flows are also going to grow very quickly um you know i think it's it's revenue is expected to quad again we're back to the analysts here but expected to quadruple by the end of 2028 if that happens then like these debt numbers start to look less scary. But certainly, and the other thing I should point out is SpaceX at the moment, for whatever reason, has an investment grade rating. Were it to lose that investment grade rating for the credit agencies, then creditors would start to worry because the debt would become much, the yields would go up a long way and it would become much more risky.

[11:19](https://realalpha.app/v/9SAgLMahZm4/?t=679) So we should definitely be looking at the credit worthiness of SpaceX. At the moment, the market's not sending out a distress signal, but it is saying there's companies getting riskier by the minute. What do you make of that investment grade rating? You said for whatever reason it has it. Do you think there are reasons it shouldn't? Again, much ink has been spilled by credit rating analysts to justify those investment grade ratings. They're based on the idea that He'll do a lot of what he says he's going to do.

[11:45](https://realalpha.app/v/9SAgLMahZm4/?t=705) Also, the Starlink is actually a pretty good business. But obviously, those ratings are up for grabs, like they get reviewed. If investors don't believe the ratings, then that's a problem for the ratings agency. So it's not in their interest to stretch credulity too far. A lot of people in these financial markets have a lot of faith in him. It is true that the Starlink business and the connectivity business is a really good business and also profitable and has completely dominated that market.

[12:11](https://realalpha.app/v/9SAgLMahZm4/?t=731) but it does seem as though this company isn't about Starlink and it isn't even about spaceships anymore. It's about data centers. And they spent more than $18 billion on CapEx last quarter and it's all going into these data centers. So, I mean, do you struggle as I do to see arguments as valid that are centered around this company being, you know, at least the price being justified by the fact that the Starlink business is strong.

[12:41](https://realalpha.app/v/9SAgLMahZm4/?t=761) I mean, it's not even really about data centers. If you looked at their IPO filing, they had a 23-ish trillion dollar total addressable market of which 22 trillion was enterprise apps. And really, they don't have any enterprise apps at the moment, really. Cursor, I guess, the coding tool. Data centers are what's happening now. And data centers are actually where the revenue is. So realistically, if we want them to generate cash, renting out data centers to AI labs is not a bad way of doing it.

[13:07](https://realalpha.app/v/9SAgLMahZm4/?t=787) um it's just that that revenue is very early stage so he needs to show that he can build the stuff he can rent it out um starlink is not the core it's not the future of spacex and he's not pretending it is i mean the future of spacex is colonies on mars like that's a whole different conversation it's not unwise of him if he thinks he can build data centers quickly to do that now and try and rent it out to people who are more desperate than he is let's just uh take a look at