Wall Street Banks Sell Final Slug of Elon Musk’s X Debt
Wall Street Journal
By Alexander Saeedy
Updated April 28, 2025 6:01 pm ET
A group of Wall Street’s biggest banks have finally dug themselves out of a $13 billion quagmire that Elon Musk created.
On Monday, banks sold the final slug of the debt they lent for Musk’s takeover of Twitter in 2022, according to people familiar with the matter. The $1.2 billion of loans sold at 98 cents on the dollar.
The sale was a long time coming. In April 2022, Morgan Stanley, Bank of America and five other banks agreed to lend the money to help Musk buy Twitter. The plan was to divvy up some $13 billion in debt, sell it to investors and earn millions in fees.
By the time the deal closed, the markets had tanked and investors were wary of betting on Twitter’s debt. The unloved loans sat on banks’ balance sheets for more than two years while the financial prospects of the newly christened X looked dimmer and dimmer. By the summer of 2024, the X deal was considered the worst buyout banks had agreed to finance since the 2008 financial crisis.
Everything turned with the election of Donald Trump as president and the rise of Musk as a crucial Trump ally, catalyzing a frenzy among investors to get a slice of Musk Inc. Advertisers such as Amazon.com started coming back to the platform, helping Musk to raise more capital for X. Then Musk merged the social-media platform with his budding artificial-intelligence startup, xAI, forming a venture with a combined value of $113 billion, Musk said.
Banks have sold some $11 billion of X loans to investors since early February.
In a sign of how eager investors were, Monday’s sale of $1.2 billion in debt happened even while markets have been in the doldrums since President Trump announced his tariff plan this month. Bankers working on the transaction said they felt that the “high quality” nature of the deal meant they could sell the debt despite recent market volatility.
In the end, banks found a graceful exit from the $13 billion in financing that weighed on them for some two-and-a-half years. Though they incurred losses, the banks collected hefty interest payments and maintained their relationships with Musk in hopes of winning fees from his next big deals. Then, when the window of opportunity was open, they unloaded billions of debt at only slight discounts.
“For those who say never bet against Elon, they seem to be right this time,” said Steven Kaplan, a finance professor at the University of Chicago.
A roller coaster of a hung deal
Musk’s offer to buy Twitter for $44 billion was a nearly 40% premium to where Twitter’s stock had been trading, reflecting the potential he saw in the social-media company.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said then.
Musk first tried to get out of the deal, prompting Twitter to sue him for breach of contract. After he closed on the deal, his moves to slash costs, staff and content moderation spooked advertisers, who wanted to ensure their ads weren’t placed near what they deem to be offensive or inappropriate content.
The banks watched anxiously. The high-interest loans were to be paid from the company’s revenue, meaning that the risk of default grew as advertisers fled.
Some banks marked down their positions to as low as 65 cents on the dollar. Hedge funds made offers to the banks to buy the loans at fire-sale prices, but the banks kept on waiting for things to improve.
The loans were stuck longer than every similar unsold deal since the 2008-09 financial crisis, according to data from PitchBook LCD. But the upside for banks was that they were getting paid an estimated $1.5 billion annually in interest on the debt, according to Musk.
Then the AI cavalry arrived. Musk in 2023 launched xAI, interlocking it with X from the start. The AI company used data from X to train its large language models, and the social-media company was given a 25% stake in the new entity.
The stake became an increasingly valuable asset on X’s balance sheet—and gave the banks evidence to prove that X’s loans were investible.
Election revives debt-sale plans
After Trump won the presidential election, plans to sell X’s debt were revived almost immediately, people close to the transaction said. The banks launched the first offerings in January.
The biggest boost came when Musk said he was merging X and xAI. Folding X into a larger company competing in a global race to develop sophisticated generative AI tools boosted investor interest even more.
Still, the legacy of the hung debt might have longer-term implications. X and other so-called hung loans prompted pay cuts and an exodus of bankers from Barclays, The Wall Street Journal reported. They also forced some banks to pull back on lending, which gave room for competitors in the booming private-credit space to muscle in.
Bankers at competitors that weren’t involved with the deal often said it was a point of pride that they weren’t involved in helping Musk take Twitter private.
Now, the combined xAI is looking to raise more capital, people familiar with the matter said. The company is targeting to raise roughly $20 billion, one of the people said, which could value the company at more than its previous valuation of $113 billion. Bloomberg earlier reported on the fundraise.
By Alexander Saeedy
Updated April 28, 2025 6:01 pm ET
A group of Wall Street’s biggest banks have finally dug themselves out of a $13 billion quagmire that Elon Musk created.
On Monday, banks sold the final slug of the debt they lent for Musk’s takeover of Twitter in 2022, according to people familiar with the matter. The $1.2 billion of loans sold at 98 cents on the dollar.
The sale was a long time coming. In April 2022, Morgan Stanley, Bank of America and five other banks agreed to lend the money to help Musk buy Twitter. The plan was to divvy up some $13 billion in debt, sell it to investors and earn millions in fees.
By the time the deal closed, the markets had tanked and investors were wary of betting on Twitter’s debt. The unloved loans sat on banks’ balance sheets for more than two years while the financial prospects of the newly christened X looked dimmer and dimmer. By the summer of 2024, the X deal was considered the worst buyout banks had agreed to finance since the 2008 financial crisis.
Everything turned with the election of Donald Trump as president and the rise of Musk as a crucial Trump ally, catalyzing a frenzy among investors to get a slice of Musk Inc. Advertisers such as Amazon.com started coming back to the platform, helping Musk to raise more capital for X. Then Musk merged the social-media platform with his budding artificial-intelligence startup, xAI, forming a venture with a combined value of $113 billion, Musk said.
Banks have sold some $11 billion of X loans to investors since early February.
In a sign of how eager investors were, Monday’s sale of $1.2 billion in debt happened even while markets have been in the doldrums since President Trump announced his tariff plan this month. Bankers working on the transaction said they felt that the “high quality” nature of the deal meant they could sell the debt despite recent market volatility.
In the end, banks found a graceful exit from the $13 billion in financing that weighed on them for some two-and-a-half years. Though they incurred losses, the banks collected hefty interest payments and maintained their relationships with Musk in hopes of winning fees from his next big deals. Then, when the window of opportunity was open, they unloaded billions of debt at only slight discounts.
“For those who say never bet against Elon, they seem to be right this time,” said Steven Kaplan, a finance professor at the University of Chicago.
A roller coaster of a hung deal
Musk’s offer to buy Twitter for $44 billion was a nearly 40% premium to where Twitter’s stock had been trading, reflecting the potential he saw in the social-media company.
“Free speech is the bedrock of a functioning democracy, and Twitter is the digital town square where matters vital to the future of humanity are debated,” Musk said then.
Musk first tried to get out of the deal, prompting Twitter to sue him for breach of contract. After he closed on the deal, his moves to slash costs, staff and content moderation spooked advertisers, who wanted to ensure their ads weren’t placed near what they deem to be offensive or inappropriate content.
The banks watched anxiously. The high-interest loans were to be paid from the company’s revenue, meaning that the risk of default grew as advertisers fled.
Some banks marked down their positions to as low as 65 cents on the dollar. Hedge funds made offers to the banks to buy the loans at fire-sale prices, but the banks kept on waiting for things to improve.
The loans were stuck longer than every similar unsold deal since the 2008-09 financial crisis, according to data from PitchBook LCD. But the upside for banks was that they were getting paid an estimated $1.5 billion annually in interest on the debt, according to Musk.
Then the AI cavalry arrived. Musk in 2023 launched xAI, interlocking it with X from the start. The AI company used data from X to train its large language models, and the social-media company was given a 25% stake in the new entity.
The stake became an increasingly valuable asset on X’s balance sheet—and gave the banks evidence to prove that X’s loans were investible.
Election revives debt-sale plans
After Trump won the presidential election, plans to sell X’s debt were revived almost immediately, people close to the transaction said. The banks launched the first offerings in January.
The biggest boost came when Musk said he was merging X and xAI. Folding X into a larger company competing in a global race to develop sophisticated generative AI tools boosted investor interest even more.
Still, the legacy of the hung debt might have longer-term implications. X and other so-called hung loans prompted pay cuts and an exodus of bankers from Barclays, The Wall Street Journal reported. They also forced some banks to pull back on lending, which gave room for competitors in the booming private-credit space to muscle in.
Bankers at competitors that weren’t involved with the deal often said it was a point of pride that they weren’t involved in helping Musk take Twitter private.
Now, the combined xAI is looking to raise more capital, people familiar with the matter said. The company is targeting to raise roughly $20 billion, one of the people said, which could value the company at more than its previous valuation of $113 billion. Bloomberg earlier reported on the fundraise.
