Wall Street banks are preparing to offload up to $3 billion in debt tied to X, the social media platform owned by Elon Musk, according to insider reports. Morgan Stanley, Bank of America, and Barclays are among the key players reaching out to potential investors ahead of the planned sale next week.
The loans stem from Musk’s $44 billion acquisition of X (formerly Twitter) in 2022. These banks initially financed the deal but have struggled to sell the debt due to concerns over the platform’s financial stability and Musk’s controversial changes. Advertiser pullouts, widespread layoffs, and reduced content moderation have all contributed to declining revenue, raising fears of default.
Pricing and Challenges
Banks are reportedly looking to sell the debt at 90 to 95 cents on the dollar, significantly higher than bids from late 2022, which would have resulted in a 20% loss. This marks a potential turning point for lenders, as market conditions seem to have improved slightly.
Elon Musk, however, denied reports of financial instability, labeling the Wall Street Journal’s claims as “false” and asserting that no such internal email was sent to X employees. Despite this, the uncertainty surrounding X’s financial health continues to cloud investor confidence.
The Roadblocks
When Musk implemented sweeping changes to X, including workforce reductions and policy overhauls, many advertisers exited the platform. This decline in ad revenue significantly devalued the loans, complicating efforts by banks to offload the debt without major losses.
Reuters previously reported in November 2024 that Musk’s rising political influence and proximity to former President Donald Trump had somewhat boosted the platform’s market perception. Still, challenges remain as the platform navigates financial recovery and reputational risks.
Banking Consortium and Strategy
Apart from Morgan Stanley, Bank of America, and Barclays, other institutions like Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale were part of the original financing group. These banks typically sell such loans soon after closing a deal, but X’s volatile trajectory has made this process unusually protracted.
With investor interest gradually warming, banks are hoping for a smoother sale this time around, avoiding the steep losses they initially anticipated. The debt market is watching closely to see if this marks a resurgence for lenders tied to high-profile leveraged buyouts.
What’s Next?
This sale represents a critical moment for both the banks involved and X’s future trajectory. If the loans are successfully sold at the targeted price range, it could signal a turning point for the social media platform’s recovery efforts and lender confidence.
