Morgan Stanley-Led Banks Sell $5.5 Billion in Elon Musk's X Media Debt
Morgan Stanley and a syndicate of banks have successfully sold $5.5 billion in debt tied to Elon Musk's social media platform, X. This transaction exceeds the initial target of $3 billion, reflecting strong investor demand.
The loan, which funds Musk's acquisition of Twitter Inc. (now X), was priced at 97 cents on the dollar, representing a smaller discount than anticipated. This ensures minimal losses for the banks on the largest portion of X-related borrowings.
The Wall Street banks had previously committed to $13 billion in debt financing for Musk's 2022 acquisition of X. However, investors initially hesitated due to Musk's business changes, staff layoffs, and revenue decline.
Investors' interest has since revived, driven by the potential benefits of Musk's association with President Donald Trump. As a key advisor to Trump, Musk has regained advertisers' confidence in X. Additionally, investors are drawn to X's stake in Musk's artificial intelligence startup, xAI.
The banks underwrote the leveraged buyout and have earned approximately $3 billion in interest income on the X debt since 2022.
Morgan Stanley boosted investor enthusiasm by sharing updated X financials and hosting a meeting with top executives in their Manhattan office.
Despite selling the entire tranche of high-ranking borrowings, the banks still have exposure to secured and unsecured junk bonds, which may be more challenging to sell at face value due to reduced creditor protection.