The cost of insuring SpaceX (NASDAQ:SPCX) debt against default hit a record Thursday, as Democrats’ election sweep raised political risks for Elon Musk’s companies and an AI stock rout engulfed Wall Street.
SpaceX’s five-year credit-default swaps widened as much as 14.6 basis points to 284.3 basis points.
Texas Governor-elect Gina Hinojosa has promised to freeze new data-center approvals, while Democratic control of Congress could bring greater scrutiny of Musk’s businesses. SpaceX has explored several potential sites in the state, including building new facilities or converting warehouses, The Information reported in July.
“Data centers in space looking pretty appealing right now,” Musk wrote Wednesday.
The Nasdaq fell more than 10% below its October peak, entering correction territory. The Philadelphia Semiconductor Index slid as much as 10.2%, while the Nasdaq 100 faced an estimated $1.8 trillion wipeout, Reuters reported.
But default protection on major AI hyperscalers has become cheaper since the election, according to Bloomberg, even as SpaceX’s costs have climbed.
Musk’s AI Debt Warning Comes Home
Less than two weeks ago, Musk warned that debt markets had “almost entirely shut off access to money” for companies lacking substantial revenue outside AI data centers.
He predicted “guppy-level death and consolidation” among more than 200 specialist cloud providers.
Musk argued SpaceX was different, citing its investment-grade rating and revenue from Starlink and rocket launches. Yet his company’s default insurance now costs more than ever.
CoreWeave Inc. (NASDAQ:CRWV) also saw its default insurance costs hit record levels Thursday, reflecting wider concerns about AI infrastructure financing.
SpaceX recently secured its GPU financing through a $40 billion lease commitment with Apollo Global Management Inc. (NYSE:APO), subject to closing conditions.
Its Super Intelligence division generated $7.56 billion in third-quarter revenue but spent $16.44 billion on capital investments, more than twice the segment’s revenue.
Tesla-SpaceX Merger Faces Political Test
The Democratic sweep has also raised questions about a potential combination of SpaceX and Tesla Inc. (NASDAQ:TSLA).
The companies lost a combined $130 billion in market value Wednesday. Bloomberg reported that analysts had warned a Democratic victory could complicate a potential merger.
Kalshi traders still assigned roughly 71% odds to a binding merger agreement before 2028, down from 76% Monday. The probability of an agreement before May 2027 stood near 57%.
Those contracts require an official announcement of a binding agreement, not a completed merger.
SpaceX retains substantial financial protection. Fitch said the $40 billion GPU lease leaves SpaceX’s BBB+ investment-grade rating unchanged. The company held $89.9 billion in cash and short-term securities against $38 billion in debt at September’s end.
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