Space Exploration Technologies Corp. (SPCX  ) is finalizing a $40 billion debt raise at interest rates well above what the rocket maker paid the last time it borrowed from bondholders.

Semafor reported Thursday that the lowest-rated portion of the deal is expected to carry a rate of about 8.3%, citing sources familiar with the matter.

A safer tranche, secured by some of SpaceX's chips, is likely to price near 7.75%. Both figures sit more than one percentage point above where the company's existing bonds trade.

Apollo and Goldman Sachs are leading the offering, and pricing could still move before the deal is finalized, which is expected sometime next week.

CEO Elon Musk is raising the money to fund a major expansion in chips and data centers.

AI Credit Selloff

Steeper rates reflect a retreating AI lending market. Semafor said the market for AI-related loans has pulled back sharply over the past few weeks.

Investors have hammered CoreWeave Inc. (CRWV  ) this month as yields on its debt climbed higher. Shares of the neocloud are down 36% in October, and its unsecured debt yields about 15%.

Spreads on CoreWeave's five-year credit default swaps last stood near 1,145 basis points, a level generally viewed as distressed.

The stress has climbed the credit ladder. Oracle Corp. (ORCL  ) still carries an investment-grade rating, yet its five-year default swaps recently traded around 295 basis points, a range more typical of high-yield borrowers, according to CNBC.

Meta Platforms Inc. (META  ) added fuel to the fire Thursday. Shares fell more than 7% after the company raised the low end of its capital spending forecast to $135 billion to $145 billion and unveiled plans to sell a new class of non-voting stock to help fund it.

The cost of insuring Meta's debt against default hit a record.

SpaceX Bonds Under Pressure

SpaceX's existing bonds have weakened in recent days. Strong quarterly earnings were overshadowed by massive spending plans and worries about the company's debt load, according to Semafor. Default insurance on SpaceX has also widened, suggesting some investors doubt its plans.

The timing is delicate as SpaceX weighs a merger with Tesla Inc. (TSLA  ), and President Donald Trump bought $5 million of SpaceX bonds in August.

Musk has plenty of company in paying up. Experts have warned the AI borrowing binge leaves companies exposed to any sharp drop in demand, while saddling them with chips that lose value within five or six years, Reuters reported. Those chips will now back part of SpaceX's new debt.

Final pricing is expected next week. Bond investors will watch closely to see whether the coupons land above or below early talk.

SPCX Stock Price Activity: SpaceX stock was up 2.24% at $147.99 at the time of publication Friday, according to Benzinga Pro.