Banks Sell $5.5B of Twitter Buyout Debt as Musk's Confidence Rises
Wall Street's faith in Elon Musk and his social media platform X is growing, as evidenced by the sale of $5.5 billion in debt associated with Musk's 2022 Twitter acquisition.
Increased Demand, Higher Pricing
Investors bought the loans from Morgan Stanley (MS) and Bank of America (BAC) at $0.97 on the dollar, exceeding initial projections by $0.02. This surge in demand boosted the pricing of the debt tied to X.
Positive Outlook for X and Banks
The favorable outcome signifies a more optimistic view of X in recent months, attributed to Musk's support for Donald Trump and his leadership of the Department of Government Efficiency (DOGE). The sale also benefits banks, who faced potential losses on the $13 billion financing they provided for the Twitter buyout.
Banks Still Hold Risky Debt
Despite the sale, banks still hold approximately $6 billion in riskier junior portions of the debt. It remains unclear whether they intend to offload these stakes, which have earned them $3 billion in interest since Musk's acquisition.
Musk's Role in D.C.
Musk is seeking to persuade Wall Street that his new role in Washington will bring additional benefits. He is expected to address a private JPMorgan event this week, emphasizing the cost savings identified by DOGE.
Musk's Contentious Actions
Musk is facing legal scrutiny for his efforts to restructure or shut down government agencies, including USAID. Additionally, his access to the Treasury Department's payment system has raised concerns.
Dimon's Evolving Relationship with Musk
JPMorgan CEO Jamie Dimon has recently expressed an improved relationship with Musk. Despite a decade-long dispute between JPMorgan and Tesla, they settled a legal fight in December and established a new commercial partnership.