This week’s bank sold $5.5 billion in debt related to Elon Musk’s 2022 Twitter acquisition, and Wall Street’s trust in Musk is rising along the billionaire’s high position in Washington indicates.
More than expected demand will raise the pricing of debts that are currently associated with mask social media platforms called X.
Investors purchased loans from a bank group led by Morgan Stanley (MS) and included Bank of America (BAC) for $0.97 in initial value dollars, according to those familiar with the issue.
This is about $0.02 more than the bank originally anticipated last week, the person said.
The Wall Street Journal and Bloomberg previously reported on the results of the sale.
These results have shown Wall Street’s views on social media platforms in recent months as Musk supports President Donald Trump and takes over the newly formed Government Efficiency (DOGE) in Washington. .
The results also represent a fortunate turnover in the bank’s events.
The bank supported the $13 billion funding when Musk bought Twitter for $44 billion in October 2022. However, as X struggled, these loans lost value and the banks were unable to withdraw from the book without causing any serious losses.
Holding such debts for a long period of time can significantly drag banks’ regulatory capital requirements and reduce their ability to fund new acquisition transactions.
These banks still hold the high-risk junior portion of debt of around $6 billion. It’s not clear if they’re trying to offload those stakes.
As Bloomberg calculates, since Musk took over Twitter, they have earned about $3 billion in interest income since holding these loans.
Last week, the bank began shopping around $3 billion in the senior portion of its debt related to Musk’s 2022 Twitter acquisition. They previously tested demand on a senior debt of $1 billion.
What helped this week’s sale is that more advertisers have returned to X since Musk’s acquisition. Bloomberg reported separately that the bank’s offer comes with an additional incentive for claims for X’s interest in mask AI startup Xai Corp.
Musk wants to convince Wall Street that his new role in DC will bring other benefits.
According to anyone familiar with the situation, the world’s wealthiest man is expected to speak this week at a private JPMorgan event featuring CEO Jamie Dimon.
Musk referenced the appearance on Sunday night on his social media platform, noting that his goal is to explain what the cost reductions that Doge has identified mean for the market.
The story continues
