Morgan Stanley Expands X Holdings Debt Offering Amidst Strong Investor Demand
Morgan Stanley is increasing the size of its latest X Holdings Corp. debt offering to $4.74 billion without a discount, minimizing its exposure to the social media platform, according to sources familiar with the matter.
The initial $3 billion portion was met with robust investor interest, prompting Morgan Stanley to augment the offering. The transaction is anticipated to conclude on Thursday. Morgan Stanley declined immediate comment.
Following Elon Musk's 2022 acquisition of Twitter, seven Wall Street banks found themselves holding $13 billion in X debt. Morgan Stanley, which arranged the financing, has spearheaded efforts to offload the debt.
This marks the third significant debt sale in less than a month. A $1 billion loan sale tested the market, yielding 90-95 cents on the dollar. Subsequently, $5.5 billion in debt was sold for 97 cents on the dollar, leaving banks with $6 billion in outstanding debt.
The successful sales represent a remarkable reversal for a financing once considered a potential disaster. Banks typically sell debt promptly after such transactions, but investor aversion to Musk's acquisition price and content moderation policy changes left the debt on their books for over two years.
However, Musk's ties to President Donald Trump, including an advisory role, have altered perceptions of X's prospects. Investors anticipate Musk's influence within the administration will bolster his business interests, despite his controversial cost-cutting efforts.
Morgan Stanley's marketing efforts have disclosed new financial details, indicating that X's revenue and profitability have stabilized after a period of decline.