A group of Morgan Stanley-led banks sold $5.5 billion of debt tied to Elon Musk’s social-media platform X, exceeding initial expectations and marking a significant milestone in their effort to free up balance sheet exposure.
The sale came after investors expressed stronger-than-expected demand, with the loan initially priced at 97 cents on the dollar – a smaller discount than expected, guaranteeing minimal losses for the banks. The debt matured in 2029 with an interest rate of 6.5 percentage points over the Secured Overnight Financing Rate.
The sale follows previous sales of $1 billion of X-related debt in January and October last year. However, investors initially shied away due to Musk’s surprise bid to take X private, leading to a steep revenue decline. Now, investors are returning, drawn to the prospect of Musk-linked businesses benefiting from his relationship with President Donald Trump.
The banks that underwrote the leveraged buyout have earned approximately $3 billion in interest income since 2022. The sale is significant as it bolsters enthusiasm for future X debt offerings, with Morgan Stanley sharing new financials and hosting meetings with top executives to showcase the platform’s prospects.
Source: https://finance.yahoo.com/news/morgan-stanley-boosts-x-debt-185145976.html