Morgan Stanley Sells $4.74 Billion in X Holdings Debt, Exiting Musk-Twitter Financing
Morgan Stanley has increased the size of its X Holdings Corp. debt offering to $4.74 billion, paving the way for the bank and other lenders to offload the majority of their exposure to Elon Musk's 2022 acquisition of the social media platform.
The Wall Street bank and six others had initially planned to sell $3 billion in debt but expanded the offering due to strong investor demand. Buyers reportedly offered to pay face value for the debt without any discount.
This latest deal marks the third X debt sale in less than a month, signaling a turnaround for banks saddled with $13 billion in debt from Musk's $44 billion Twitter buyout.
Musk's association with former President Donald Trump, X's improving financials, and its involvement in the AI project xAI have bolstered investor confidence.
The initial $1 billion loan test sale priced between 90 and 95 cents on the dollar. This was followed by a $5.5 billion sale at 97 cents on the dollar. After this week's sale, banks will hold just $1.3 billion of X debt.
Banks typically sell debt after financing buyouts, but investors were initially hesitant due to concerns about Musk's acquisition price and potential policy changes. However, recent signs of revenue growth and X's xAI stake have reassured investors.
Representatives for X and Morgan Stanley did not immediately respond for comment. Musk's close relationship with Trump has also improved perceptions of X's prospects.
With this sale, Morgan Stanley and other lenders are offloading the bulk of their X debt exposure, marking a significant shift for banks that had faced challenges in this financing market.