Up until last week, Goldman Sachs was out trying to shop a $500 million SpaceX bond offering. But according to a new Bloomberg report, by the time Goldman had interested parties arrive for a meeting at the Four Seasons Hotel last Wednesday, SpaceX already had Bank of America running point on a $750 million dollar deal, instead.

Goldman had always been viewed as one of the banks closest to Elon Musk (and by proxy, his companies), especially given their involvement in early Tesla equity financings. Goldman also helped take the company public in 2010 and led a $1.8 billion bond sale last year. Bank of America already had a relationship with SpaceX, but recently was said to be shying away from some of the "riskiest corners of the corporate debt market".

Reportedly, Goldman Sachs wound up balking when SpaceX made the demand of being able to raise additional debt in the future with "wide latitude". It’s then assumed that SpaceX went to Bank of America when Goldman wasn’t able to meet this provision and B of A was. Despite showing positive EBITDA, SpaceX is reportedly still burning through cash and posting negative earnings when you ex out customer pre-payments and include costs related to non-core research and development.

Goldman's cautious attitude is a microcosm of how banks in general could be starting to take less risk in the $1.3 trillion leveraged loan market. However, the continued robust demand for these types of loans still gives substantial leverage to the borrowers, who are able to shop around and extract better covenants from lenders.

Musk is reportedly also looking at other ways to try and raise money from his SpaceX stake. It was reported that he recently had inquired with at least one bank about a personal loan tied to his stake in the company.

This bond shuffle marks the latest move between Musk's portfolio of companies to make sure that they are all adequately financed. Tesla seems as though it shouldn’t have trouble raising money now after a "blowout" quarter, but Musk has indicated in the past that he has no intention of taking SpaceX public until it is "flying to Mars". A margin loan becomes an obvious way for Musk to raise some cash and it is a method he has employed with his stake in Tesla – 40% of was used as collateral at the end of 2017.

We just recently profiled the leveraged loan market and how demand has been off the charts for this type of covenant-lite paper in 2018.

Not only are money managers hungry for these deals, but retail has also been allocating capital to fund these loans. There was $282 million of inflows into ETFs and mutual funds that buy these deals during the week ending September 12, we noted last month.

According to Cannaccord, pension funds have also been big buyers of credit products this year. Collateralized loan obligations have also been setting records, with $84 billion worth of them being sold this year.

This demand is why the types of concessions Bank of America allowed for SpaceX have become par for the course for the leveraged loan market and a strong indicator that the bubble may still have more room to expand - before eventually bursting, which it inevitably will.