NIXSOLUTIONS: Wall Street Prepares X Debt Sale

Wall Street banks are preparing to sell $3 billion in debt tied to Elon Musk’s social media company, X, next week, according to Reuters. This is part of the $13 billion total debt linked to Musk’s $44 billion acquisition of the platform, formerly known as Twitter.

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Details of the Planned Sale

Morgan Stanley has reportedly started reaching out to potential investors for the sale. According to The Wall Street Journal, the banks aim to sell the debt at a slight discount, pricing it between 90 and 95 cents on the dollar. The sale will focus on senior debt—obligations that take priority in repayment during a liquidation—while retaining junior assets.

Morgan Stanley, along with Bank of America and Barclays, initially provided Musk with $13 billion to finance the purchase of Twitter in 2022. At the time, the price was considered steep, and the platform’s volatile performance since the acquisition has further diminished its value. Analysts have labeled the deal one of the most unfavorable financing agreements for banks since the 2008 financial crisis, adds NIXSOLUTIONS.

Challenges and Financial Outlook

In January, Musk reportedly addressed X employees in a letter, acknowledging the platform’s stagnant user growth, underwhelming revenue, and financial challenges. The Wall Street Journal cited the letter, but Musk later denied sending such correspondence on X’s platform. Despite these challenges, the company has shown signs of improvement, with some brands resuming ad spending on the platform.

The banks involved have not disclosed how they value the loans tied to X. Meanwhile, some investors have written down their stakes in the company by up to 75%. Yet, we’ll keep you updated as more developments unfold, especially given reports of X’s steady financial recovery.