Wall Street banks have offloaded almost all of the $12.5 billion in debt that financed Elon Musk’s acquisition of Twitter, marking a dramatic shift in how the debt is perceived by investors. A group of banks, led by Morgan Stanley, sold $4.74 billion of the loans late last week, exceeding the initial $3 billion target as investor demand surged to $12 billion in orders, according to sources familiar with the deal. The sale is a relief for the group of seven lenders, including Bank of America, Barclays, and MUFG, who had been holding the debt since October 2022 when Musk’s purchase of Twitter—now rebranded as X—was finalized.
The debt has been reappraised in the wake of Donald Trump’s election victory, with the billionaire’s proximity to the former president influencing a shift in how investors view the risk associated with the loans. As detailed by the Financial Times (FT), the growing perception of Musk’s business moves, especially his involvement in the launch of his AI start-up, xAI, has helped turn the tide. This shift in sentiment is reflected in the secondary market, where large blocks of the loans are now trading at around 101 to 102 cents on the dollar.
The sale of the loans represents a substantial change from earlier in 2023 and 2024 when the lenders rejected offers to sell the debt at steep discounts. Instead, they held out, hoping a turnaround at Twitter would limit losses. Investor interest intensified following Trump’s election, and the subsequent injection of xAI into the deal further bolstered the value of Musk’s social media platform, enhancing the security of the loans. Now, with investor confidence growing, the remaining loans are expected to continue attracting strong bids.
However, the final $1 billion in unsecured loans—viewed as the riskiest portion—remains unsold, and it remains to be seen how the group of lenders will proceed. As reported by FT, the banks may opt to market the remaining debt or refinance it with new preferred equity, given the strong demand already seen for other parts of the loan package.
