Elon Musk's artificial intelligence venture xAI is reportedly seeking to raise $5 billion through loans and bonds with the help of Morgan Stanley MS, amid lingering debt concerns from his Twitter acquisition and a political split with Donald Trump.
What Happened: Morgan Stanley has begun marketing a $5 billion debt package for xAI, offering investors two options: a floating-rate loan priced at 97 cents on the dollar with a rate of 700 basis points over the SOFR benchmark, or a fixed-rate loan and bond deal at 12%, reported Reuters, citing sources familiar with the matter.
According to the report, the offering is a "best efforts" deal, meaning Morgan Stanley will not guarantee the full raise or commit its own capital—an approach reflecting caution amid uncertain macroeconomic and political conditions.
The bank held investor meetings last week to present preliminary financials for xAI, the report added.
Morgan Stanley did not immediately respond to Benzinga's request for comments.
Why It's Important: The decision to avoid financial commitment may stem from the $13 billion debt Morgan Stanley and other banks underwrote in Musk's 2022 Twitter buyout, which they were unable to offload for over two years, the report said.
That debt was only sold earlier this year after X's operating performance improved and investor interest returned.
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The $5 billion raise also comes as Musk's political ties with President Trump have deteriorated, creating uncertainty around the federal support his companies may receive.
xAI is also reportedly pursuing $20 billion in equity funding at a valuation between $120 billion and $200 billion, the report noted, citing people familiar with the matter.
Benzinga's Edge Stock Rankings show a positive outlook for Morgan Stanley over the short, medium and long term. For a deeper look at the metrics, click here.
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