The senior secured term loan, which has a 9.5% fixed rate, will be sold by the bank at face value.
Morgan Stanley is making more headway in its years-long attempt to sell off loans that backed Elon Musk’s turbulent acquisition of the social networking company by completing the sale of an additional $3 billion in X Holdings Corp. debt.
According to persons with knowledge of the situation who asked not to be named while discussing the terms of a private deal, the bank intends to offer the senior secured term loan, which has a fixed rate of 9.5%, at no discount to face value after getting more than enough demand from investors.
This is the third deal in less than a month, when Morgan Stanley led a consortium of seven Wall Street banks in the sale of $6.5 billion worth of X debt. That sum would rise to $9.5 billion as a result of this deal, giving the banks just an additional $3 billion to record.
For what had long been viewed as a doomed financing of Musk’s 2022 acquisition of the platform formerly known as Twitter Inc., the sales represent a stunning turnaround. Following such a takeover, banks usually sell debt to the market right quickly, but investors objected to the plan because they were worried about the cost Musk had incurred and that his modifications to content-moderation guidelines would alienate advertising.
However, opinions regarding X’s chances quickly shifted due to the billionaire’s tight relationship with President Donald Trump, which included an advisory position. Despite the fact that his aggressive government cost-cutting measures have caused turmoil in Washington, investors anticipate that Musk’s position in the administration would benefit his corporate interests.
Morgan Stanley first put investor appetite to the test by selling $1 billion worth of loans at prices between 90 and 95 cents on the dollar. Following a full-scale marketing campaign that included a meeting with senior X executives, it swiftly followed up with a sale that was originally planned to be $3 billion but garnered high demand. The bank was able to sell it for 97 cents on the dollar after increasing the amount to $5.5 billion.
A portion of the selling details were previously revealed by the Financial Times.
In addition to providing Musk with buying advice, Morgan Stanley oversaw the finance and sales process and owned the majority of the X debt. BNP Paribas SA, Mitsubishi UFJ Financial Group Inc., Barclays Plc, Bank of America Corp., Mizuho Financial Group Inc., and Societe Generale SA are among the other shareholders.
