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Elon Musk’s SpaceX is seeking to raise $40 billion in a financing effort led by Apollo Global Management to buy Nvidia chips as the AI and rocket group amplifies its bet on the chipmaker’s cutting-edge technology.
The company is seeking to raise about $10 billion in bank loans and $30 billion in investment-grade debt to finance its blockbuster chip order, according to people familiar with the matter.
Private equity group Apollo is expected to lead the deal and help sell the debt to a wide range of investors. Bond group Pimco was among a small group of lenders in talks to finance the deal, the sources said. The transaction is expected to be finalized in 2027.
SpaceX’s financing plans highlight the massive sums that are being raised to finance investments in data centers, chips and other infrastructure that support AI.
Insurance companies and pension funds would be able to buy SpaceX’s debt because of its BBB credit rating, the second lowest in the investment rankings. These funds take much more limited positions in low-quality securities.
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 pledged to double down on the group’s technology for its AI initiatives. It would also mark a victory for Nvidia, which faces growing competition from chipmakers looking to challenge its dominance in advanced semiconductors.
“We decided to build exclusively on Nvidia because we believe the Vera Rubin architecture is the best,” Musk said during SpaceX’s August earnings conference call, referring to Nvidia’s cutting-edge AI platform.
“We believe this is the best AI computer, and we greatly appreciate our close, multi-level cooperation and partnership with Nvidia.”
SpaceX earned an investment-grade rating shortly after its $86 billion IPO in June. Less than two weeks later, it sold $25 billion worth of investment-grade bonds. However, the bonds were sold off in the following days amid concerns about growing debt and heavy capital spending.
Its bonds maturing in 2056 trade at about 85 cents on the dollar, with a yield about 2.27 percentage points higher than that of U.S. Treasuries, similar to the level of junk bonds, according to MarketAxess data.
Musk’s limited financial disclosures have turned some investors away from SpaceX debt in the past.
Investors that SpaceX has already contacted to fund its multibillion-dollar chip purchase said they received only a short, two-page memo with photos of space and an arrow indicating that the company would build data centers “somewhere in the universe.”
“How are we supposed to convey this to the IC? ” said one of the people, referring to the internal investment committee that approves deals.
Apollo has made prime corporate lending a pillar of its $800 billion credit business, leading multibillion-dollar financing transactions for the likes of Intel and Bayer. Its life insurance and annuity subsidiary, Athene, typically buys a large portion of these offerings.
Apollo also led a $35 billion chip financing deal in June for processors made by Nvidia rival Broadcom, which represented the largest private credit transaction at the time.
In August, Nvidia announced it was working with some of Wall Street’s biggest firms on a $500 billion 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 AI infrastructure development at lower borrowing costs for its smaller customers, with Nvidia potentially backing up to 25% of the chip’s value.
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