Morgan Stanley Markets $5 Billion Debt Package for Elon Musk's xAI Amid Political Tensions
6 Sources
[1]
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
[2]
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
[3]
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
[4]
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
[5]
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
[6]
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
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Morgan Stanley is seeking investors for a $5 billion debt offering for Elon Musk's AI startup xAI, adopting a cautious approach amid political tensions between Musk and President Trump.
Morgan Stanley's Cautious Approach to xAI Debt Offering
Morgan Stanley is currently marketing a $5 billion debt package for Elon Musk's artificial intelligence startup xAI, adopting a more cautious approach than in previous deals with the billionaire entrepreneur
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. The bank is offering investors two options: a floating-rate term loan B priced at 97 cents on the dollar with a variable interest rate of 700 basis points over the SOFR benchmark, or a fixed-rate loan and bond deal at 12%2
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Source: Bloomberg
'Best Efforts' Strategy and Investor Outreach
Unlike previous transactions, Morgan Stanley is not guaranteeing the issue volume or committing its own capital to the deal. This 'best efforts' approach means the size of the debt will depend on investor interest
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. The bank has been reaching out to a broader pool of investors, including smaller lenders who were not initially given access, to shore up demand for the offering1
.Political Tensions and Market Dynamics
The debt offering comes at a time of heightened political tension between Elon Musk and U.S. President Donald Trump. This rift has cast a shadow over the future of Musk's businesses, potentially affecting investor sentiment and demand for the debt
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. The political climate has raised concerns about possible cancellations of federal contracts or grants to Musk's companies, despite their private status2
.xAI's Valuation and Equity Funding
In addition to the debt offering, xAI is reportedly in talks to raise about $20 billion in equity funding. Sources familiar with the matter suggest the company could be valued between $120 billion and $200 billion
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. Initially, Musk explored raising funds in parallel with a merger of xAI and social media platform X, but this plan did not move forward2
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Source: Benzinga
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Lessons from Previous Deals
Morgan Stanley's cautious approach to the xAI debt offering appears to be influenced by its experience with Musk's $44 billion acquisition of Twitter (now X) in 2022. In that deal, Morgan Stanley and other banks committed $13 billion in debt but were unable to offload it for over two years due to rising interest rates and Musk's restructuring of the company
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.Market Interest in AI and Musk's Ventures
Despite the political uncertainties, there remains significant investor interest in artificial intelligence companies and Musk's ventures. The improved operating performance of X and the surge in AI-related investments have contributed to this interest
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. However, the recent political developments have introduced new risk factors that investors and Morgan Stanley are carefully considering in this debt offering.References
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