Morgan Stanley Markets $5 Billion Debt for Musk's xAI
Morgan Stanley (NYSE:MS) is marketing a $5 billion debt package to fund Elon Musk's xAI venture in a best-efforts deal after the Musk-Trump feud dented investor sentiment.
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The offering, launched last week, includes a floating-rate term loan, fixed-rate term loan and senior secured notes, with orders already topping $3.5 billion and climbing to $5 billion by June 9.
Unlike a typical underwritten deal, Morgan Stanley isn't committing its own capital but is relying on investor demand, reaching out to smaller lenders this week to fill out the syndicate ahead of a June 17 close. One tranchea floating-rate term loan Bis pitched at 97 cents on the dollar with a spread of 700 basis points over SOFR, though final pricing and terms remain negotiable.
Proceeds will support xAI's general corporate needs across its AI startup and the X social platform, formerly Twitter. The debt sale comes amid heightened scrutiny after Musk's public fallout with President Trump slashed Tesla's (NASDAQ:TSLA) market cap by about $75 billion, testing appetite for Musk-linked financings.
Still, credit investors see the offering as a rare gateway into the booming AI sector. Separately, xAI is reportedly lining up up to $20 billion in equity fundingpotentially valuing the company above $120 billionunderscoring the ambitious scale of Musk's AI ambitions.
Why It Matters: The success of this best-efforts debt sale will be a litmus test for investor confidence in Musk's ventures amid reputational volatility and set the tone for future AI-focused financings.
Investors will watch final pricing, tranche allocations and any updates on xAI's concurrent equity round when Morgan Stanley locks in its syndicate list by mid-June.
This article first appeared on GuruFocus.
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