In a major move to reduce its debt, banks led by Morgan Stanley have sold $5.5 billion of debt tied to Elon Musk's $44 billion acquisition of Twitter, now rebranded as X.
The sale, which involves a portion of the $13 billion in loans provided to fund the purchase in 2022, marks a shift in the financial landscape for Musk's social media platform.
The deal was offered to a select group of investors, including major banks such as Bank of America, Barclays, BNP Paribas, and others.
According to Reuters, the loans, initially expected to be sold at 90-95 cents on the dollar, were priced higher at 97 cents, indicating increased investor confidence.
The debt carries a floating interest rate of around 11%, which is significantly higher than typical Wall Street loans, making it an attractive proposition for certain investors.
Musk's X Debt Sale Signals Confidence Boost Amid Financial Struggles
The move is a crucial step for Musk and the banks involved, as they have struggled to sell the debt in the past.
A previous attempt in late 2022 saw interest rates that would have led to substantial losses for the banks, with bids coming in at only 60 cents on the dollar.
However, the current sale signals a shift in sentiment, driven partly by increased investor interest in Musk's ventures and X's improving financial outlook.
Investor confidence has been bolstered by growing advertiser support for X.
After a series of controversies, including Musk's controversial posts and the exit of major advertisers like Disney, companies such as Amazon and Apple have resumed spending on the platform, NY Post said.
This rebound has helped X's financials, which showed an increase in adjusted earnings in the last quarter of 2024.
Despite this, Musk has acknowledged that X's financial situation remains difficult, citing stagnant user growth and unimpressive revenue.
Yet, with the sale of this debt, X is taking steps toward reducing its financial burdens. Musk's personal involvement with President Trump and his position in Washington have also sparked renewed interest from some investors.
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