Morgan Stanley Leads $3 Billion Debt Sale for Musk's X Acquisition
A syndicate led by Morgan Stanley prepares to offload debt associated with Elon Musk's buyout of X (formerly Twitter). The deal, with a potential $3 billion value, includes senior debt offered to select investors at a 90-95 cent discount.
This move represents the banks' latest attempt to divest themselves of $13 billion in Twitter debt acquired in 2022. Other banks involved include Bank of America, Barclays, and Mitsubishi UFJ. They intend to retain the more junior debt for the time being.
The debt financing for Musk's acquisition became a significant burden for the banks, with aggressive interest rate hikes by the Federal Reserve adding to the issue. However, recent market sentiment has improved, with investors eager for new transactions amid a lull in M&A activity.
Musk's ownership of X has seen significant restructuring, cost cuts, and a focus on free speech advocacy. Despite initial challenges, recent optimism has emerged surrounding his businesses, including his role in the Trump administration.
The debt associated with the acquisition includes three tranches: $6.5 billion in senior secured leveraged loans and two $3 billion tranches in secured and unsecured junk bonds. Musk and co-investors provided $33.5 billion in equity for the privatization.