Wall Street banks prepare sale of up to $3 billion in X loans next week, sources say

By Tatiana Bautzer and Saeed Azhar

(Reuters) -Wall Street banks are getting ready to sell up to $3 billion of debt holdings in X, the social-media platform controlled by Elon Musk, two sources with knowledge of the matter said on Friday.

Morgan Stanley (NYSE:) bankers have reached out to investors ahead of a planned sale next week, the people added.

The bank and others, such as Bank of America and Barclays (LON:), had lent to Musk to complete his $44 billion buyout of X, formerly known as Twitter, in 2022.

expect to get 90 to 95 cents on the dollar, according to the Wall Street Journal, which earlier reported the preparations for the sale.

Morgan Stanley, Bank of America, Barclays, X and Elon Musk did not immediately respond to requests for additional comment.

Banks typically sell such loans to investors soon after a deal is done, but lenders have faced difficulties in offloading the debt in the case of X.

Musk’s sweeping changes to the platform, including laying off many people who worked to moderate content, and one of his posts on X, scared away advertisers and hit revenues. That reduced the value of the debt, as the risk of default increased.

Reuters reported in November that Musk’s political ascendancy and proximity to U.S. President Donald Trump had banks pondering over the improved prospects of the social media platform, helping them in selling the debt without having to take a massive loss on the deal.

Attempts to sell the debt in late 2022 attracted bids which would have seen banks taking as much as a 20% loss on the face value of the debt, sources at the time said.

Other banks in the consortium that helped finance the deal include Mitsubishi UFJ (NYSE:) BNP Paribas (OTC:), Mizuho (NYSE:), and Societe Generale (OTC:).