The $5.5 billion loan sale marks a significant turnaround for the banks involved in Elon Musk's acquisition of X (formerly Twitter). A consortium led by Morgan Stanley successfully offloaded a substantial portion of the $13 billion debt at 97 cents on the dollar, a considerable improvement from earlier attempts12. The debt package, initially comprising a $6.5 billion secured term loan, $500 million revolving credit facility, and $6 billion in secured and unsecured loans, was offered to a select group of investors3.

Key details of the sale include:

• Banks priced the debt higher than initially expected (97 cents vs. 90-95 cents)1

• Investors will receive an 11% yield on the loans1

• Minimum commitments were in the hundreds of millions of dollars3

• This sale contrasts sharply with a late 2022 attempt that attracted bids around 60 cents on the dollar3

• The consortium included major banks like Bank of America, Barclays, Mitsubishi UFJ, BNP Paribas, Mizuho, and Societe Generale3

This successful sale indicates growing investor confidence in X's financial prospects and potentially allows the banks to profit from the transaction, a marked improvement from the potential losses they faced previously3.

Investor confidence in X has surged, driven by several key factors. The platform reported impressive 2024 financial results, with adjusted EBITDA of $1.25 billion and annual revenue of $2.7 billion, surpassing investor expectations1. This marks a significant improvement from Twitter's 2021 figures of $682 million in adjusted EBITDA and $5 billion in revenue, the last full year before Musk's acquisition1.

The renewed investor interest is further bolstered by Elon Musk's growing political influence, particularly his role as an adviser to President Donald Trump1. Major advertisers, including Amazon, are cautiously returning to the platform, signaling potential revenue stabilization2. Additionally, X's 10% stake in Musk's AI venture xAI, valued at approximately $5 billion, has attracted investor attention due to its potential to enhance creditor returns1. These factors collectively contributed to the strong demand that enabled banks to increase the debt offering from an initial $3 billion target to $5.5 billion34.

The successful sale of $5.5 billion in loans tied to X marks a crucial milestone for the banks involved, including Morgan Stanley, Bank of America, and Barclays, which had been struggling to offload the debt since Elon Musk's $44 billion acquisition in 2022. Initially burdened by X's underwhelming performance and high interest rates, the banks managed to reduce their exposure without incurring significant losses, thanks to renewed investor interest and favorable pricing at 97 cents on the dollar12.

Despite this progress, challenges remain. The banks still hold approximately $6 billion in X-related debt, some of which is considered higher risk2. Meanwhile, X continues to face financial strain with annual interest payments exceeding $1 billion, making profitability elusive32. However, the return of major advertisers like Amazon and Apple's potential reentry into X's advertising ecosystem offers a glimmer of hope for stabilizing revenue streams45. These developments underscore the delicate balance between financial recovery and ongoing risks for both the platform and its creditors.