Morgan Stanley is marketing a $5 billion debt package for Elon Musk’s artificial intelligence company, xAI, amid a public falling out between Musk and U.S. President Donald Trump. The offering includes bonds and two types of loans: a floating-rate term loan priced at 700 basis points over the SOFR benchmark rate at 97 cents on the dollar, and a fixed-rate loan and bond offering with a 12% interest rate. The bank is employing a “best efforts” approach, meaning it will not guarantee the full $5 billion or commit capital, reflecting caution due to broader macroeconomic conditions.
This strategy contrasts with Morgan Stanley’s previous $13 billion debt commitment for Musk’s 2022 Twitter acquisition, which banks were unable to offload for two years. Investor appetite is bolstered by rising interest in AI and Musk’s prior political influence, although recent tensions may dampen demand. Additionally, xAI is exploring equity funding of up to $20 billion, potentially valuing the firm between $120 billion and $200 billion. A proposed merger with X (formerly Twitter) was considered but not pursued.
