Unlock Editor’s Digest Lock for Free
FT editor Roula Khalaf will select your favorite stories in this weekly newsletter.
Wall Street banks have been used to help fund his takeover since Donald Trump handed the role to the billionaire at the heart of his administration. Almost everything has been eliminated.
A group of banks led by Morgan Stanley sold $47.4 billion in loans late Thursday, exceeding the initially planned $3 billion as investors filed $12 billion orders.
The latest sales are a boon for a group of seven lenders, including Bank of America, Barclays and MUFG. He took $125 billion in October 2022 and funded the purchase of Musk’s social media platform. x.
They now have more than $1 billion in loans after a sale highlighting how Musk’s proximity to Trump has changed the perception of debt that investors previously perceived as extremely dangerous. I own it.
In further indications of demand, the big block of loans on Friday was already trading between 101 and 102 cents in secondary market dollars after sales on Thursday.
Lenders will turn down offers from investors to buy debt at a sudden discount in 2023 and 2024, and instead bet that the final conversion of X’s business limits the potential losses on the loan.
Investor interest in loans rose in the weeks after Trump’s election victory in November, with Morgan Stanley receiving a pitch to buy a portion of his debt at 75-80 cents in dollars.
The loan appeals rose even further after Musk bets his stock on his artificial intelligence startup Xai. In addition to strengthening the valuation of social media companies, the move also provided new security for those with loans.
In January, Morgan Stanley sold $1 billion in debt to a large group of credit investors, including Diameter Capital Partners. A $5.5 billion loan was then sold in February, and sold for 97 cents in dollars before the banks sold them without discounting them this week.
As part of an increase in fixed-rate loan sales on Thursday, X agreed to end its $500 million revolving credit line with seven banks.
Investors are currently waiting to bid on the sale of unsecured loans of over $1 billion, the final and most dangerous part of the transaction. That debt pays a higher interest rate, but is exposed by losses if X falls into bankruptcy or is necessary to restructure the debt.
It is unclear how Morgan Stanley and six other banks will proceed with the sale. Lenders could sell their debt or refinance into a new priority equity given the strong demand for other parts of the $12.5 billion loan, according to those familiar with the issue.
Morgan Stanley declined to comment. X did not respond to requests for comment.
