Banks have successfully sold $5.5 billion in loans tied to X Corp., the social media platform owned by Elon Musk, amid surging investor demand.
What Happened: The sale, which was initially planned at $3 billion, was expanded due to heightened interest, with investors including Pimco and Citadel purchasing the loans at 97 cents on the dollar, people familiar with the matter told The Wall Street Journal.
The floating-rate debts carry an interest rate of approximately 11%—a premium even compared to some of Wall Street's riskiest loans.
The transaction underscores the renewed investor enthusiasm surrounding X Corp. following Musk's growing influence in Washington and the return of key advertisers, such as Amazon.com Inc. The platform faced significant turmoil after Musk's $44 billion acquisition in 2022, as advertisers pulled back due to concerns over content moderation. While X is still grappling with financial challenges, recent signs of stability have drawn fresh interest from investors.
At a recent investor meeting led by Morgan Stanley MS bankers and X CEO Linda Yaccarino, financial documents revealed that Musk's artificial intelligence startup, xAI, has injected hundreds of millions of dollars into X. The two entities share executives and business ties, and X now holds a 10% stake in xAI, valued at approximately $5 billion, according to the WSJ report.
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Why It Matters: The loan sale is a significant win for the banks, including Morgan Stanley, Bank of America Corp BAC, and Barclays BCS, which originally extended financing for Musk's 2022 buyout. The sluggish performance of X and high interest rates had forced them to hold onto the debt far longer than expected.
Despite the successful sale, the banks still retain around $6 billion in X-related debt, some of which is considered riskier. X remains under financial pressure, with annual interest payments exceeding $1 billion.
With major advertisers like Amazon ramping up spending and Apple Inc. reportedly considering reintroducing ads.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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