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Musk’s xAI Raises Yield and Extends Deadline on $5B Debt Sale Amid Weak Investor Demand

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Elon Musk’s AI venture, xAI, has extended the deadline and increased the yield on a $5 billion debt offering due to a lackluster response from investors, according to a source familiar with the matter. The commitment deadline was moved from Tuesday to Friday to allow more time for investor participation.

To make the offer more appealing, xAI raised the yield on $3 billion in bonds and a $1 billion term loan from 12% to 12.5%. Additionally, the yield on a second term loan was increased from 700 to 725 basis points above the Secured Overnight Financing Rate (SOFR), with that loan now priced at 96 cents on the dollar.

The move reflects investor concerns over xAI’s unrated status and limited financial transparency, which increases perceived risk. As of Thursday, the average yield on high-yield bonds was 7.6%, according to the ICE BofA High Yield Index—significantly lower than what xAI is offering, signaling its need to compensate for higher investor uncertainty.

If demand remains modest, borrowers like xAI must offer better terms to attract buyers. One portfolio manager who chose not to participate noted that healthy deals are typically oversubscribed multiple times, and the increased yield suggests investor hesitancy.

Morgan Stanley, the lead on the transaction, did not commit to underwriting or backstopping the deal—unlike during Musk’s acquisition of Twitter—making this a “best efforts” transaction. If the offering closes Friday, securities are expected to be distributed to investors by Monday.

Earlier this month, the xAI deal entered the spotlight amid a public exchange between Musk and former U.S. President Donald Trump on social media. Despite Musk’s profile and past financial dealings, this offering has yet to capture strong enthusiasm from the high-yield or leveraged loan markets.

Neither xAI nor Morgan Stanley responded to requests for comment.

Tesla Invites Select Users to Texas Robotaxi Trial with Front Seat Safety Monitors

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Tesla (TSLA.O) has invited a small group of users to participate in a limited test of its robotaxi service in Austin, Texas, tentatively scheduled to begin this Sunday, according to social media posts and email screenshots. The invitations indicate that a Tesla employee will accompany riders in the front passenger seat during the trial.

This trial in Austin is a critical step for Tesla as the company faces challenges including declining car sales linked to CEO Elon Musk’s political stances. Tesla has increasingly shifted focus from producing affordable electric vehicles to advancing robotics and artificial intelligence, a strategy that underpins much of its market valuation.

Elon Musk has emphasized safety for the trial, stating that the vehicles will be monitored remotely by humans and expressing confidence in scaling the robotaxi service quickly. The initial deployment will involve about 10 Model Y SUVs equipped with Tesla’s full self-driving driver assistance software.

The rollout could be delayed, and operations may be limited or suspended in poor weather conditions. Riders must be at least 18 years old. Tesla’s cautious approach to the robotaxi launch drew approval from X.com user Omar Qazi (@WholeMarsBlog), who received an invitation and noted, “Tesla is rolling out the Robotaxi service extremely cautiously, which is good. Baby steps.” Musk responded, “Very much so.”

Despite the enthusiasm, commercializing autonomous vehicles remains costly and risky. Tesla, along with competitors like Alphabet’s Waymo (GOOGL.O) and Amazon’s Zoox (AMZN.O), has faced federal probes and recalls linked to crashes involving self-driving cars.

Experts have raised concerns about Tesla’s heavy reliance on cameras and AI, without backup sensors such as lidar or radar, warning that adverse weather like fog, heavy rain, or sun glare could compromise safety.

Recently, a group of Democratic lawmakers from Austin urged Tesla to postpone the rollout until September, when new state regulations on autonomous vehicles will come into effect.

Users in Austin who receive invitations can download Tesla’s Robotaxi app to summon a vehicle. One screenshot shared online stated, “Through this exclusive preview, you’ll have the opportunity to provide valuable feedback on our Robotaxi service.” Reuters was unable to immediately verify the screenshots’ authenticity.

EU Probes Corporate Structure of Elon Musk’s X Months After xAI Acquisition

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The European Union announced on Thursday that it is seeking further information from Elon Musk’s social media platform X regarding recent changes to its corporate structure. This inquiry comes months after the platform was acquired by Musk’s xAI in a $33 billion deal.

A spokesperson for the European Commission, the EU’s executive branch, stated, “We are following closely changes in the corporate structure of X, as we would changes in any other designated platform.” However, the spokesperson did not confirm Bloomberg News reports suggesting that regulators are considering potential fines against X under the Digital Services Act (DSA).

Bloomberg reported that the regulator might announce a fine on X before its summer recess in August for alleged violations under the DSA, though such a timeline could be delayed.

Representatives from both xAI and X did not immediately respond to Reuters’ requests for comment.

Under the DSA, companies found in breach can face fines of up to 6% of their global turnover, with repeat offenders potentially banned from operating within Europe.

Earlier this month, X updated its blue checkmark disclaimer to preempt a possible substantial fine from EU antitrust authorities. The European Commission had issued preliminary findings in July last year stating that X violated the DSA’s rules on deceptive design by converting the blue checkmark into a paid verification, thereby misleading users about credibility. X has disputed this assessment.