SpaceX wins Baa1 investment-grade rating from Moody's

Moody's Investors Service assigned SpaceX a Baa1 credit rating on June 19, classifying the Elon Musk-led company's debt as investment grade for the first time and lowering its borrowing costs weeks after its record $85 billion public listing.

The rating places SpaceX's debt in the lower-medium tier of investment grade, on par with issuers Moody's assesses as having "adequate capacity to meet financial commitments." The action comes as SpaceX prepares to meet with investors as early as next week to discuss a bond offering that could exceed $20 billion, Bloomberg News reported June 18, citing people familiar with the plans.

SpaceX's investment-grade status marks a significant shift for a company that reported a loss of about $4.3 billion in its most recent quarter. The Baa1 rating reflects Moody's view that SpaceX's dominant position in the global launch market and the recurring revenue from its Starlink satellite constellation provide sufficient cash flow coverage for its debt obligations, according to the rating agency's published methodology.

The credit upgrade arrives as SpaceX shares have surged 34.5% since their trading debut, rising from $150 per share to just under $202. The company now ranks as the fifth-largest publicly traded company with a market value of $2.6 trillion, trailing only Microsoft at $2.9 trillion, according to market data. The stock has eased about 3.4% in the past week to around $185.

The Baa1 rating gives SpaceX access to a broader pool of institutional bond buyers, including pension funds and insurance companies that are restricted to investment-grade securities. That could prove critical as the company pursues capital-intensive projects including Starship development and Starlink expansion. The rating also signals confidence in SpaceX's business model at a time when some analysts have warned the stock is overvalued, with Morningstar arguing investors could buy shares at "more attractive levels" following the IPO.

SpaceX's path to inclusion in the S&P 500 remains uncertain. S&P Dow Jones Indices said earlier this month it would not waive the standard 12-month waiting period or profitability requirements for newly public companies, delaying any potential addition for at least a year. The index also requires positive earnings across four consecutive quarters, a threshold SpaceX does not currently meet after reporting a $4.3 billion quarterly loss.

The company could join the Nasdaq-100 as soon as early July after meeting the 15-trading-day eligibility requirement, potentially exposing the stock to funds such as the Invesco QQQ Trust, one of the world's largest exchange-traded funds. Inclusion in the Russell 1000 index could follow shortly after, according to index eligibility rules.

This article is for informational purposes only and does not constitute investment advice.