Banks led by Morgan Stanley have successfully sold $5.5 billion of the $13 billion debt incurred to finance Elon Musk’s $44 billion acquisition of Twitter, now rebranded as X. This sale is part of an effort to offload a significant portion of the debt, which includes a combination of secured and unsecured loans.
The deal, which was marketed to a select group of investors, included banks such as Bank of America, Barclays, Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale. The debt was initially offered at a price range of 90-95 cents on the dollar, but it was ultimately priced at 97 cents, resulting in a potential profit for the banks involved. Investors in this loan will receive a yield of 11%.
This marks the second attempt by these banks to sell down the debt since Musk’s 2022 acquisition. A prior attempt in late 2022 to sell the unsecured loan failed, as the bids were significantly lower, at 60 cents to the dollar, potentially causing a large loss for the banks. This time, however, investors seem to be more confident in X’s prospects, partly due to Musk’s ties to the newly elected Trump administration and his involvement in the AI startup xAI, which may drive further interest in the platform.
Despite the improved pricing, some investors have been hesitant to buy into the debt, given X’s challenges with advertisers and uncertain revenue growth after Musk’s changes to the platform. Additionally, X still has no official credit rating, which raises concerns among potential buyers. Nevertheless, the sale signals growing investor confidence, despite the risk that the platform’s revenue might not justify the price of the debt.
