When Musk sees SpaceX’s IPO, xAI plans to pay off a $3B bond early
xAI plans to pay off $3 billion of high-yield bonds early, a move that could significantly reduce SpaceX's debt, according to a Bloomberg report.
The company intends to redeem the bond at 117 cents on the dollar.
The bond, which carries a 12.5 percent coupon, has traded at a bargain price and has rallied in recent weeks. Pricing data showed an increase of three points to 117 cents from Monday.
Early repayment usually requires issuers to compensate investors with full provisions or penalty payments covering the expected interest over a period of time. The unusual period emphasizes efforts to optimize the balance sheet.
Musk recently combined xAI with SpaceX to create a broader business that carries nearly $18 billion in debt, including liabilities tied to the X acquisition. Bankers are said to be devising a financial strategy to reduce the high interest costs that have accumulated in recent years.
Elon Musk is preparing to take his SpaceX company public. Bloomberg reported last week that the Texas-based firm could secretly file an initial public offering as soon as this month, valuing it at more than $1.75 trillion and keeping it on the June list.
In June, xAI revised its pricing terms to attract investors for a broader $5 billion debt package that includes $3 billion in bonds Trans has now retired and two additional $1 billion loans.
One loan was issued at par with bonds, while the other yielded 7.25 percentage points against the benchmark, down from 96 cents on the dollar.
