Goldman Sachs Group, Inc. and Apollo in Talks to Syndicate SpaceX (SPCX.US) $40 Billion AI Chip Financing as Market Appetite Faces a Test

Goldman Sachs Group, Inc. (GS.US) and Apollo Global Management Inc (APO.US) are in talks with Wall Street investors to begin selling portions of SpaceX's (SPCX.US) approximately $40 billion chip financing deal. Meanwhile, the AI trade is facing turbulence after a landslide Democratic victory. The two firms have begun approaching potential buyers of the multi-tranche financing, people familiar with the matter said. SpaceX has said the deal structure is designed to keep the debt off SpaceX's balance sheet and is the largest GPU financing arrangement on record. In some cases, investors were asked to buy tranches of up to $500 million before the formal syndication process begins, in order to complete the deal as quickly as possible, the people said. Syndication is planned to launch shortly. Political Landscape Shifts Abruptly, AI Trade Faces a Test SpaceX, Elon Musk's rocket, satellite and AI company, unveiled the financing deal in October, and investors agreed to the package before pricing. This leaves lenders exposed to market risk during a turbulent period. Investors have retreated from AI trades, questioning whether revenue can ultimately justify staggering spending; that sentiment has made lenders cautious about some of SpaceX's newer cloud-service competitors, including CoreWeave (CRWV.US). Democrats winning control of Congress after the midterm elections has further intensified these pressures. Democrats won on voters' concerns about the rising cost of living and the war with Iran. Data centers also became a fierce election focus, especially in Texas which flipped blue just months after freezing approvals for new projects. As the political landscape shifted overnight, markets reacted sharply, with SpaceX and Tesla, Inc. (TSLA.US) shares moving lower. SpaceX's data center is located in Memphis, Tennessee, and it is developing other sites in Mississippi. Debt Off Balance Sheet, but Rent Obligations Cannot Be Waived In the $40 billion deal, a special purpose vehicle managed by Apollo-backed Atlas SP will purchase NVIDIA Corporation (NVDA.US) chips and issue debt to lenders, according to reports. Through this structure, SpaceX can protect its corporate credit rating. SpaceX will lease the chips under a five-year agreement but is not providing residual value guarantees or other commitments that tech companies typically make to obtain financing, according to a presentation. "SpaceX's obligation to pay rent is absolute," the presentation materials said. Crucially, the documents show SpaceX cannot invoke force majeure clauses to suspend payments, in contrast with companies such as Oracle Corporation (ORCL.US). Oracle Corporation was previously reported to have invoked force majeure in an attempt to delay its data center obligations. "Rent is payable regardless of equipment condition, accidents or force majeure events, giving investors a clear view of SpaceX's credit profile," the documents said. The debt is divided into multiple tranches, including an $8.3 billion senior secured loan to be syndicated to banks and multiple bond tranches to be sold to asset managers, the people said. Goldman Sachs Group, Inc. is leading the loan portion, and Apollo is a key investor in the bonds, the people said. The Pacific Investment Management Company also participated in the deal. The debt package, together with a $7 billion lease prepayment, will be used to pay for approximately $47.3 billion of graphics processing unit equipment NVIDIA Corporation's latest Rubin chips, according to the documents. The chips will be delivered in the first half of 2027.