Morgan Stanley Markets $5 Billion Debt Package for Elon Musk's xAI Amid Political Tensions

Morgan Stanley Widens Net to Land $5 Billion Debt for Musk's xAI

Morgan Stanley is reaching out to a broader pool of investors to shore up demand for a $5 billion debt sale for Elon Musk's artificial intelligence startup xAI Corp., a deal that offers a window into the fallout from the billionaire's feud with US President Donald Trump. When Morgan Stanley launched the debt offering early last week, it already had more than $3.5 billion in orders. Some investors took that as a sign that the deal would soon be oversubscribed, a goal that has been easily exceeded for other Musk-related offerings. As of Monday, though, demand was only up to around $5 billion, and the bank began reaching out to smaller lenders who had not been given access last week, according to people familiar with the deal.

Morgan Stanley markets $5 billion for Elon Musk-owned xAI in loans, bonds, sources say

NEW YORK, June 10 (Reuters) - Morgan Stanley is marketing a $5 billion package of bonds and two loans on behalf of billionaire Elon Musk-owned xAI, at the same time as a falling out between the world's richest man and the U.S. president plays out in public, sources familiar with the matter told Reuters. As of last week, the bank started discussing a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points (bps) over the SOFR benchmark rate, one person familiar with the matter said. It is offering a second option, loan and bonds at a fixed rate of 12%, the person familiar added. The terms are preliminary and will depend on investor demand, according to the source. Morgan Stanley held a meeting with investors last week in which some financials of the company were shared. Morgan Stanley is taking a different approach in marketing the $5 billion debt for Musk's xAi from previous transactions, sources familiar with the matter told Reuters. Morgan Stanley will not guarantee the issue volume or commit its own capital to the deal, the sources said. The 'best efforts' transaction, which means the size of the debt will depend on investor interest, is not an uncommon practice but shows banks are probably being more prudent lending in an uncertain macro environment. The people spoke on condition of anonymity because the discussions with investors are not public. Morgan Stanley declined to comment, while xAI did not immediately respond to a request for comment. Banks were also likely choosing this approach to avoid putting themselves in a similar spot to when they committed to give $13 billion of debt to Musk to finance his $44 billion acquisition of X in 2022 and could not get out of that position for two years. The X financing is considered one of the boldest bets by seven banks led by Morgan Stanley who committed $13 billion in debt to the $44 billion acquisition by Elon Musk in October 2022. Soon after the deal to buy Twitter, as X was called at the time, the Federal Reserve began raising U.S. interest rates and Musk started restructuring the company. Banks typically sell such loans to investors soon after the deal is done, but in the case of X, they were stuck holding it for over two years. They could only dispose of that debt earlier this year capitalizing on X's improved operating performance over the previous two quarters as traffic on the platform rose before and after the U.S. presidential elections. Musk's role in U.S. President Donald Trump's return to office and public displays of his closeness to the most powerful position in the world also boosted interest for the debt from investors jockeying for some influential link to a new regime, as well as a surge in investor interest for exposure to artificial intelligence companies. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity funding, according to people familiar with the matter. Two of the people added the deal would value the company at more than $120 billion, while the other two people said figures as high as $200 billion had been discussed. Musk initially explored raising funds in parallel with a merger of xAI and social media platform X, but that plan did not move forward, two of the people said. What has changed in just the space of a few months is Musk's political sway over Trump after an acrimonious schism erupted between the two. That has cast a cloud over the future of the businesses owned by the world's richest man, which though private could be hurt if the federal government chooses to cancel contracts or grants to them. It has also heightened the risk of demand being reduced for any money that will be raised or investors asking for a higher risk premium on the new debt. Reporting by Matt Tracy, Echo Wang and Tatiana Bautzer in New York, Dawn Chmielewski in Los Angeles Editing by Shri Navaratnam Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Artificial Intelligence Echo Wang Thomson Reuters Echo Wang is a correspondent at Reuters covering U.S. equity capital markets, and the intersection of Chinese business in the U.S, breaking news from U.S. crackdown on TikTok and Grindr, to restrictions Chinese companies face in listing in New York. She was the Reuters' Reporter of the Year in 2020. Tatiana Bautzer Thomson Reuters Tatiana Bautzer is a U.S. banking correspondent at Reuters in New York. She previously covered banks in Brazil, breaking news on deals by major global corporations, initial public offerings and bankruptcies. She has also delved into corruption scandals at Brazilian conglomerates and business disputes between billionaires. Prior to joining Reuters in 2015, Bautzer worked for business magazines Exame and Istoe Dinheiro and newspapers Valor Economico and O Estado de S. Paulo. She previously served as international correspondent for Valor Economico in Washington, D.C., covering multilateral institutions and trade. Bautzer holds a B.A. in Journalism and an MBA from the University of Sao Paulo.

Morgan Stanley markets $5 billion for Elon Musk-owned xAI in loans, bonds, sources say

Morgan Stanley is marketing a $5 billion package of bonds and two loans on behalf of billionaire Elon Musk-owned xAI, at the same time as a falling out between the world's richest man and the U.S. president plays out in public, sources familiar with the matter told Reuters. As of last week, the bank started discussing a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points (bps) over the SOFR benchmark rate, one person familiar with the matter said. It is offering a second option, loan and bonds at a fixed rate of 12%, the person familiar added. The terms are preliminary and will depend on investor demand, according to the source. Morgan Stanley held a meeting with investors last week in which some financials of the company were shared. Morgan Stanley is taking a different approach in marketing the $5 billion debt for Musk's xAi from previous transactions, sources familiar with the matter told Reuters. Morgan Stanley will not guarantee the issue volume or commit its own capital to the deal, the sources said. The 'best efforts' transaction, which means the size of the debt will depend on investor interest, is not an uncommon practice but shows banks are probably being more prudent lending in an uncertain macro environment. The people spoke on condition of anonymity because the discussions with investors are not public. Morgan Stanley declined to comment, while xAI did not immediately respond to a request for comment. Banks were also likely choosing this approach to avoid putting themselves in a similar spot to when they committed to give $13 billion of debt to Musk to finance his $44 billion acquisition of X in 2022 and could not get out of that position for two years. The X financing is considered one of the boldest bets by seven banks led by Morgan Stanley who committed $13 billion in debt to the $44 billion acquisition by Elon Musk in October 2022. Soon after the deal to buy Twitter, as X was called at the time, the Federal Reserve began raising U.S. interest rates and Musk started restructuring the company. Banks typically sell such loans to investors soon after the deal is done, but in the case of X, they were stuck holding it for over two years. They could only dispose of that debt earlier this year capitalizing on X's improved operating performance over the previous two quarters as traffic on the platform rose before and after the U.S. presidential elections. Musk's role in U.S. President Donald Trump's return to office and public displays of his closeness to the most powerful position in the world also boosted interest for the debt from investors jockeying for some influential link to a new regime, as well as a surge in investor interest for exposure to artificial intelligence companies. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity funding, according to people familiar with the matter. Two of the people added the deal would value the company at more than $120 billion, while the other two people said figures as high as $200 billion had been discussed. Musk initially explored raising funds in parallel with a merger of xAI and social media platform X, but that plan did not move forward, two of the people said. What has changed in just the space of a few months is Musk's political sway over Trump after an acrimonious schism erupted between the two. That has cast a cloud over the future of the businesses owned by the world's richest man, which though private could be hurt if the federal government chooses to cancel contracts or grants to them. It has also heightened the risk of demand being reduced for any money that will be raised or investors asking for a higher risk premium on the new debt.

Elon Musk's xAI Seeks $5 Billion Via Morgan Stanley Amid Trump Rift And 2022 Twitter Debt Hangover: Report - Morgan Stanley (NYSE:MS)

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. See Also: Mark Zuckerberg Warns Of 'Serious Disadvantage' As China's Data-Center Blitz Could Let DeepSeek Leapfrog US AI Labs 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. Pre-IPO Offer: Get A Piece Of A Nearly $5T Global Opportunity By Joining BOXABL As An Early Shareholder At Just $0.80/Share Massive Demand & Disruptive Potential - Boxabl has received interest for over 190,000 homes, positioning itself as a major disruptor in the housing market. Revolutionary Manufacturing Approach - Inspired by Henry Ford's assembly line, Boxabl's foldable tiny homes are designed for high-efficiency production, making homeownership more accessible. Affordable Investment Opportunity - With homes priced at $60,000, Boxabl is raising $1 billion to scale production, offering investors a chance to own a stake in its growth. Share Price: $0.80 Min. Investment: $1,000 Valuation: $3.5B Click Here To Invest For Just $0.80/Share ($1000 Min) 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. Photo Courtesy: JRdes on Shuttertsock.com Read Next: Cathie Wood Dumps Palantir As Stock Touches Peak Prices, Bails On Soaring Flying-Taxi Maker Archer Aviation Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors. MSMorgan Stanley$132.000.14%Stock Score Locked: Edge Members Only Benzinga Rankings give you vital metrics on any stock - anytime. Unlock RankingsEdge RankingsMomentum82.93Growth67.89Quality33.10ValueNot AvailablePrice TrendShortMediumLongOverviewMarket News and Data brought to you by Benzinga APIs

Morgan Stanley markets $5 bln debt for Musk's xAI amid rift with Trump - Reuters By Investing.com

Investing.com-- Morgan Stanley (NYSE:MS) is marketing a $5 billion debt package for Elon Musk's artificial intelligence venture xAI, amid rising political friction between the billionaire and U.S. President Donald Trump, Reuters reported on Tuesday, citing sources familiar with the matter. The offering includes bonds and two loans, with one floating-rate term loan B being pitched at 97 cents on the dollar and priced at 700 basis points above the SOFR benchmark. Another option combines fixed-rate bonds and loans yielding 12%, according to the Reuters report. In a notable departure from Musk's 2022 Twitter acquisition financing, Morgan Stanley is taking a "best efforts" approach, declining to commit its own capital or guarantee deal volume, the report said. This reflects a more cautious stance from lenders after they were forced to hold $13 billion in debt from the X deal for over two years amid tightening Fed policy, it added. Investor demand could be affected by Tesla (NASDAQ:TSLA) CEO's recent public fallout with Trump, which may impact federal contracts or political goodwill. Still, enthusiasm around artificial intelligence and Musk's track record is fueling interest, according to the Reuters report. xAI is also reportedly seeking $20 billion in equity funding at a valuation between $120 billion and $200 billion, the report added. Neither xAI nor Morgan Stanley has commented publicly on the deal.

Morgan Stanley markets $5 billion for Elon Musk-owned xAI in loans, bonds, sources say

NEW YORK (Reuters) -Morgan Stanley is marketing a $5 billion package of bonds and two loans on behalf of billionaire Elon Musk-owned xAI, at the same time as a falling out between the world's richest man and the U.S. president plays out in public, sources familiar with the matter told Reuters. As of last week, the bank started discussing a floating-rate term loan B at 97 cents on the dollar with a variable interest rate of 700 basis points (bps) over the SOFR benchmark rate, one person familiar with the matter said. It is offering a second option, loan and bonds at a fixed rate of 12%, the person familiar added. The terms are preliminary and will depend on investor demand, according to the source. Morgan Stanley held a meeting with investors last week in which some financials of the company were shared. Morgan Stanley is taking a different approach in marketing the $5 billion debt for Musk's xAi from previous transactions, sources familiar with the matter told Reuters. Morgan Stanley will not guarantee the issue volume or commit its own capital to the deal, the sources said. The 'best efforts' transaction, which means the size of the debt will depend on investor interest, is not an uncommon practice but shows banks are probably being more prudent lending in an uncertain macro environment. The people spoke on condition of anonymity because the discussions with investors are not public. Morgan Stanley declined to comment, while xAI did not immediately respond to a request for comment. Banks were also likely choosing this approach to avoid putting themselves in a similar spot to when they committed to give $13 billion of debt to Musk to finance his $44 billion acquisition of X in 2022 and could not get out of that position for two years. The X financing is considered one of the boldest bets by seven banks led by Morgan Stanley who committed $13 billion in debt to the $44 billion acquisition by Elon Musk in October 2022. Soon after the deal to buy Twitter, as X was called at the time, the Federal Reserve began raising U.S. interest rates and Musk started restructuring the company. Banks typically sell such loans to investors soon after the deal is done, but in the case of X, they were stuck holding it for over two years. They could only dispose of that debt earlier this year capitalizing on X's improved operating performance over the previous two quarters as traffic on the platform rose before and after the U.S. presidential elections. Musk's role in U.S. President Donald Trump's return to office and public displays of his closeness to the most powerful position in the world also boosted interest for the debt from investors jockeying for some influential link to a new regime, as well as a surge in investor interest for exposure to artificial intelligence companies. Apart from selling debt, xAI has also been in talks to raise about $20 billion in equity funding, according to people familiar with the matter. Two of the people added the deal would value the company at more than $120 billion, while the other two people said figures as high as $200 billion had been discussed. Musk initially explored raising funds in parallel with a merger of xAI and social media platform X, but that plan did not move forward, two of the people said. What has changed in just the space of a few months is Musk's political sway over Trump after an acrimonious schism erupted between the two. That has cast a cloud over the future of the businesses owned by the world's richest man, which though private could be hurt if the federal government chooses to cancel contracts or grants to them. It has also heightened the risk of demand being reduced for any money that will be raised or investors asking for a higher risk premium on the new debt. (Reporting by Matt Tracy, Echo Wang and Tatiana Bautzer in New York, Dawn Chmielewski in Los AngelesEditing by Shri Navaratnam)