SpaceX's 30-year bond credit spread surpassed 2 percentage points despite the company's BBB credit rating, exceeding even the 1.55 percentage point average for lower BB-rated bonds. The bond yield rose from 6.7% to 7.3% within two weeks of issuance, reflecting investor skepticism over long-term AI infrastructure profitability. This development occurred as big tech companies issued a record $570 billion in AI infrastructure bonds this year — double last year's volume — while Wall Street primary dealers recorded their first net selling position in corporate bonds since 1998, amid geopolitical uncertainty from the Iran conflict and tightening credit spreads.
SpaceX 30-Year Bond Spread Exceeds BB-Rated Average Despite BBB Rating
SpaceX's 30-year bond credit spread reached 2 percentage points, surpassing the 1.55 percentage point average for BB-rated bonds despite SpaceX holding a higher BBB investment-grade rating. The bond yield increased from 6.7% at issuance to 7.3% within two weeks. Mariya Entina, portfolio manager at DoubleLine, stated the firm remains "skeptical about the long-term profitability of AI capital expenditures." Pramod Atluri, manager at Capital Group, assessed that "technology evolves too rapidly, making long-term bonds a riskier proposition."
Amazon's $25 billion bond issuance saw orders for 5-year notes exceed 30-year note orders by 20%, indicating a broader shift toward short-term bond preferences in AI-related debt markets. Big tech AI infrastructure bond issuance totaled $570 billion this year, more than double last year's volume.
Wall Street Dealers Record First Net Selling Position in Corporate Bonds Since 1998
Wall Street primary dealers' corporate bond inventory turned negative for the first time since 1998, recording a net selling position of $4 billion (approximately 6 trillion won). This marked a significant shift from the average inventory of $16 billion (approximately 24 trillion won) held in 2017. Corporate bond credit spreads tightened to 0.74 percentage points above US Treasuries this week, approaching multi-decade lows.
As of the end of last month, dealers net sold $13.7 billion in corporate bonds with maturities over 5 years while net buying $9.66 billion in short-term corporate bonds. Market analysts attribute the defensive positioning to geopolitical uncertainty from the Iran conflict and the high interest rate environment.
Power Grid Equipment Delivery Times Extend to Four Years Amid AI Data Center Demand
Delivery times for critical power grid equipment including transformers and circuit breakers extended from the previous 1-2 years to 3-4 years, driven by simultaneous surges in AI data center demand and aging US power grid replacement needs. According to consulting firm Wood Mackenzie, US demand for step-up transformers for generators increased 274% between 2019 and 2025. Delivery times reached 160 weeks (approximately 3 years and 1 month) in the first quarter of this year, up from 143 weeks in 2024.
Submarine high-voltage cable producers Prysmian, Nexans, and NKT reported full order books through 2029. California's Roseville Electric Utility stated it now orders large transformers for substations 5 years before project commencement. Brookfield expanded financing for Bloom Energy's fuel cell power projects from $5 billion (approximately 7.5 trillion won) to $25 billion (approximately 34.6 trillion won) — a fivefold increase.
Wood Mackenzie projected US data center power capacity will reach 110GW by 2030, up from the current approximately 24GW — a 4.6-fold increase. Allianz Research estimated that critical power equipment supply shortages of approximately 30% could result in delays or cancellations for about half of the approximately 12GW of US data center capacity planned for this year.
FAQ
Why did SpaceX's 30-year bond spread exceed the BB-rated average despite holding a BBB rating?
Investors expressed skepticism about the long-term profitability of AI capital expenditures, causing SpaceX's 30-year bond credit spread to surpass 2 percentage points — higher than the 1.55 percentage point average for lower-rated BB bonds. Portfolio managers cited concerns that technology evolves too rapidly for long-term debt instruments tied to AI infrastructure investments.
What caused Wall Street dealers to turn net sellers of corporate bonds for the first time since 1998?
Primary dealers shifted to a net selling position of $4 billion in corporate bonds due to geopolitical uncertainty from the Iran conflict and corporate credit spreads tightening to 0.74 percentage points above US Treasuries — approaching multi-decade lows. Dealers net sold $13.7 billion in bonds with maturities over 5 years while maintaining net purchases of $9.66 billion in short-term bonds.
How long are current delivery times for power grid equipment needed for AI data centers?
Delivery times for critical power grid equipment reached 160 weeks (approximately 3 years and 1 month) in the first quarter of this year, with some large transformers requiring up to 4 years. Submarine high-voltage cable producers reported full order books through 2029, and California's Roseville Electric Utility stated it orders transformers 5 years before project start dates.
