[UNITED STATES] A consortium of major Wall Street banks, including Morgan Stanley, Bank of America, Barclays, and Mitsubishi UFJ, has successfully sold the final $1.2 billion tranche of debt tied to Elon Musk’s $44 billion acquisition of Twitter, now known as X. This marks the conclusion of the banks’ nearly two-year effort to offload a total of $13 billion in loans associated with the deal.
Final Debt Sale Marks End of Banks’ Exposure
The remaining $1.2 billion in loans were sold at 98 cents on the dollar, offering investors a 9.5% yield. This transaction completes the banks’ divestiture of the debt, which had been a significant financial burden since Musk's acquisition in 2022. The original financing package included a $6.5 billion secured term loan, $3 billion in secured loans, a $3 billion unsecured loan, and a $500 million revolving credit facility.
The debt originally proved difficult to offload due to concerns surrounding X’s financial stability and declining advertising revenues post-acquisition. In late 2022 and throughout 2023, the banks were forced to hold onto the debt longer than anticipated, incurring losses on balance sheets and drawing criticism from some shareholders. Internal memos reviewed by industry analysts indicated that the debt had been initially expected to be resold within weeks of the deal closing.
The sale was facilitated by improved financial prospects for X, bolstered by Musk’s political connections and the recent acquisition of X by Musk’s AI company, xAI, in a deal valuing the platform at approximately $33 billion. These developments have renewed investor confidence, enabling the banks to offload the debt at favorable terms.
Much of the renewed appetite from institutional investors has been attributed to the broader rally in speculative tech and AI-linked assets in early 2025. As AI tools gained mainstream traction and market optimism surged, assets tied to Musk’s ventures, including xAI and X, became increasingly attractive. Analysts also noted that bond market conditions improved during this period, allowing riskier corporate debt to clear at higher valuations than previously possible.
Banks Reap Benefits from Debt Sale
The successful sale of the debt has provided a financial boost to the participating banks. Morgan Stanley, for instance, reported a strong first quarter in 2025, posting a net income of $4.3 billion—up 26% year-over-year—beating analysts' expectations. Key to this performance was a 45% surge in equity trading revenue, which hit a record $4.1 billion amid market volatility. The bank also saw increased "other" revenue in its institutional securities division, partly driven by the sale of debt tied to Elon Musk’s 2022 acquisition of X.
Bank insiders have described the conclusion of the debt sale as a strategic relief, freeing up capital that had been earmarked for potential losses or further markdowns. Some institutions, such as Barclays, had reportedly restructured internal teams specifically to manage and hedge the risk exposure tied to the X loan package. With the exit complete, those resources are expected to be redirected toward new underwriting efforts in the AI and tech sectors.
X's Financial Turnaround
Following Musk's acquisition, X faced significant challenges, including sharp revenue declines and mounting debt as advertisers fled over content moderation concerns. At one point, Musk admitted the company was on the brink of bankruptcy. However, a turnaround began when Musk launched his artificial intelligence company xAI in 2023, granting X a 25% stake. This stake gained significant value, bolstering X's financial position. Musk's proximity to former President Donald Trump further encouraged advertisers to return, reviving ad revenue slightly by the end of 2024. In early 2025, investor sentiment shifted as major buyers purchased over $10 billion in X debt, significantly more than the $3 billion banks initially planned to sell. A key moment came when Musk announced a merger between X and xAI, valuing the combined company at over $100 billion. The integration of xAI's Grok chatbot into X has aligned with Musk’s vision of transforming X into an "everything app."
Still, some analysts remain cautious about the long-term financial sustainability of X, citing lingering concerns over user engagement metrics and volatile revenue streams. While the merger with xAI has created new monetization opportunities, questions persist about whether X can fully capitalize on its vast user base in an increasingly competitive tech ecosystem dominated by rivals such as Meta and Alphabet.
The completion of this debt sale signifies a pivotal moment in the financial landscape surrounding Elon Musk's acquisition of X. It underscores the evolving investor confidence in X's future prospects and marks the end of a significant chapter for the involved financial institutions.
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