An executive at Invesco Advisers Inc. publicly criticized the secondary-market behavior of SpaceX's first bond offering, labeling the post-sale trading "very sloppy." The comments came from Matt Brill, who leads investment-grade credit for North America at Invesco. He described the outcome as "really really disappointing" during a recent television appearance.
The company behind the deal received almost $90 billion of orders for a $25 billion high-grade bond sale completed last week. Despite that level of demand, the bonds appeared to price at levels cheaper than comparable-rated debt, and the notes weakened promptly in secondary trading following the sale.
Brill questioned whether the weak secondary performance stemmed from an error by the underwriting banks or from a lack of demand among the more traditional buyers of investment-grade paper such as pension funds and insurance companies. Invesco, which manages nearly $2.5 trillion in assets, is an active purchaser of corporate bonds and has acquired SpaceX bonds.
Against this backdrop, Brill pointed to the broader market environment: U.S. investment-grade corporate bond spreads are at 0.74 percentage point, a level that approaches multi-decade lows. He said investors have been trimming credit exposure because they see "a lot more downside than upside at this point." He also noted a preference to avoid concentrated exposure in the technology sector.
Market context and implications
- The SpaceX deal attracted sizable order interest yet traded softer than some peers after issuance.
- Questions remain over whether execution by underwriters or a shortfall in demand from institutional buyers drove the post-sale weakness.
- Tight investment-grade spreads are influencing portfolio positioning, with some investors reducing credit risk.
This episode highlights tensions between strong headline demand at the book-building stage and subsequent price action in the secondary market. It also underscores how compressed spreads can lead to caution among large fixed-income allocators.