Stocks are hot, bonds are cold! SpaceX's $25 billion bond debut did not meet expectations, and trillion-dollar market value makes it difficult to ease concerns in the bond market.

Despite credit rating agencies saying that SpaceX's qualifications are excellent and have reached investment-grade standards, the bond market's attitude is much more cautious. As part of a $25 billion financing plan, SpaceX's 2036 maturity bonds were priced with a 1.4 percentage point premium compared to equivalent US Treasuries at that time, which is about 0.4 percentage points higher than the average spread of BBB-rated bonds. This premium reflects that despite SpaceX setting a milestone with the largest IPO in history and receiving a lot of attention from the capital markets this month, the rocket, satellite, and artificial intelligence empire under Elon Musk is facing a more sober bond market. However, the spread level is enough to attract bond investors. According to sources, during the peak subscription period, orders reached almost $90 billion, dropping to $73 billion at pricing, still well above the issuance size. Data compiled shows that the final subscription multiple was less than three times, below the average of four times for high-quality corporate bonds this year. Another source mentioned that the most concentrated demand was for bonds with the shortest term and lowest risk. This preference, combined with the premium SpaceX is paying, likely reflects market concerns about its cash flow. The company is currently in a cash-burning phase, with S&P Global, Inc. rating agency predicting this trend to continue until 2030, with cash burn accelerating significantly next year. Although revenue growth is expected, expenditure expansion is projected to be even faster. "While the stock market shares in the upside returns, bondholders do not," said Grant Nahernan, founder and chief investment officer of Shorecliff Asset Management. "Therefore, compensation must be obtained for the risk. That's why a company with a market value of trillions of dollars still needs to pay a considerable spread to access the bond market for financing." Additionally, some bond investors may not be eager to enter the market in a big way at this timeSpaceX is expected to continue raising billions of dollars in the bond market over the next few years. The disparity between ambition and reality SpaceX is aiming for the sky. In addition to its rocket launch business, the company is accelerating the construction of a global satellite network, expanding into artificial intelligence, and even planning to send data centers into space. However, fixed-income investors have limited profit potential in these grand plansregardless of how successful the company may become, bondholders can only receive their principal and interest, without sharing in any excess returns. This contrasts sharply with equity investors, who have the potential to earn huge returns in the best-case scenario and are, therefore, more willing to take risks and bet on Elon Musk's personal charisma as the founder. Even in the stock market, after experiencing a surge in the initial public offering, market enthusiasm has waned in recent days. SpaceX's stock price rebounded on Tuesday, but three consecutive days of sell-offs have wiped out over $600 billion in market value. The current stock price is about 15% higher than the IPO price. Bond investors do not lack confidence. As of June 19th, SpaceX has over $100 billion in cash. Rating agencies say the company intends to maintain its high investment-grade rating, and can preserve the rating through measures like reducing investments and has room for issuing additional stock for funding. "Is this a story of 'trust me and it will work out'? I believe it is," admitted Brett Kozlowski, portfolio manager at GW&K Investment Management. Even if Musk and the company itself perform well, "it won't change the various noises we will be constantly facing in the news headlines." However, bond market investors have recently suffered losses on technology company bonds, making them more cautious. Last week, chip giant NVIDIA Corporation issued $25 billion in high-grade bonds, which attracted up to $85 billion in subscription orders. However, these bonds are currently trading slightly weaker compared to US Treasuries.