Banks Offload $5.5 Billion of Musk’s X Debt to Investors, Source Says
Banks led by Morgan Stanley have successfully sold $5.5 billion of the $13 billion in debt they initially provided to support Elon Musk’s $44 billion acquisition of Twitter—now rebranded as X—in 2022, according to a source familiar with the deal.
The financing package for the acquisition included a $6.5 billion secured term loan, a $500 million revolving credit facility, a $3 billion unsecured loan, and $3 billion in secured loans.
A source from the investor group said the debt was offered to a select group by a banking consortium that included Bank of America, Barclays, Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale. The banks were reportedly seeking minimum commitments in the hundreds of millions of dollars.
Initially, the debt was marketed at 90-95 cents on the dollar, but banks managed to secure a higher price of 97 cents, the source added. Investors in the deal will receive an 11% yield.
This marks only the second known attempt to offload the debt. In late 2022, banks attempted to sell the unsecured portion, but bids came in at around 60 cents on the dollar, which would have resulted in significant losses. At 97 cents, the latest sale likely generated a profit.
The Wall Street Journal first reported the loan sale.
Typically, banks sell such debt to investors shortly after closing a deal. However, in X’s case, they held onto it due to concerns over Musk’s sweeping changes to the platform, including mass layoffs of content moderators and controversial posts that scared off advertisers, impacting revenue and increasing default risk.
Investor sentiment shifted following Donald Trump’s election victory in November, as Musk’s close ties to the incoming administration were expected to drive more traffic to X. One investor, who declined to participate in the deal, said buyers likely felt more optimistic about X’s future.
A key selling point was investors gaining exposure to X’s stake in Musk’s artificial intelligence startup, xAI, according to a Bloomberg report.
However, another investor from a major high-yield fund manager opted out, citing uncertainty over whether Musk’s political connections would significantly boost X’s revenue. He also questioned the value of purchasing unrated debt at 90-95 cents on the dollar.
Bank of America, Barclays, BNP Paribas, Mizuho, and Societe Generale declined to comment, while other banks did not immediately respond to requests for comment.
