Morgan Stanley set to sell $3 billion of X debt without any discount

By Gillian Tan and Sridhar Natarajan

 

Morgan Stanley is finalising the sale of another $3 billion of X Holdings Corp. debt, making further progress in a years-long effort to offload loans that supported Elon Musk’s tumultuous purchase of the social-media platform.

 

The bank plans to sell the senior secured term loan, which carries a fixed rate of 9.5 per cent, at no discount to face value after receiving more than enough demand from investors, according to people with knowledge of the matter, who asked not to be identified discussing private deal terms.

 

It is the third transaction in a frenetic period of less than a month, during which Morgan Stanley led a group of seven Wall Street banks to sell a total of $6.5 billion in X debt. This sale would increase that amount to $9.5 billion, leaving the banks with only another $3 billion slug on their books.

 

The sales mark a surprising turnaround for what had long been seen as an ill-fated financing of Musk’s 2022 takeover of the platform previously known as Twitter Inc. Banks typically sell debt into the market immediately after such a buyout, but investors balked at the idea, concerned about the price Musk had paid and that his changes to content-moderation policies would drive away advertisers.

 

But the billionaire’s close ties to President Donald Trump, including an advisory role, swiftly changed perceptions about X’s prospects. Investors expect Musk’s position in the administration to help his business interests, even as his aggressive government cost-cutting efforts have sown upheaval in Washington.

 

Morgan Stanley first tested investor appetite with a $1 billion loan sale that priced in a range of 90-to-95 cents on the dollar. It quickly followed up with a sale that was initially meant to be $3 billion but received strong demand after a full-blown marketing effort that included a meeting with top X executives. The bank scaled up the size to $5.5 billion and was able to sell it for 97 cents on the dollar.

 

The Financial Times earlier reported some parts of the sale details.

 

Morgan Stanley advised Musk on the purchase, led the financing and sales and also held the largest chunk of X debt. Other holders include Bank of America Corp., Barclays Plc, Mitsubishi UFJ Financial Group Inc., BNP Paribas SA, Mizuho Financial Group Inc. and Societe Generale SA.